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Joined by Juan José Chacón-Quirós, Founder and Chief Executive Officer. For starters, why don't you guys just give us a company background, the company vision, how you guys fit into the broader medical device aesthetic space, for us.
Yeah, so I founded this company 20 years ago, because I saw the need to bring technology into the breast aesthetics and breast reconstruction space. We did so with an angle of women's health. If you think about, like, you know, what was going on in those years, you know, the U.S. was coming out of a moratorium in breast implant technology. You had two companies that basically were leaders in the market but not leaders in technology. What we did is, you know, fundamentally rethought the entire technology base. Since 2010, when we first went to market, OUS, until today, we've proven that, you know, a completely different set of technology can move markets and can create new opportunities for growth.
Great, and you guys just reported earnings last Friday. You wanna give the audience a quick summary and download?
Sure. Happy to do so and thanks for having us. So we did report our third quarter results last Thursday. We grew about 4.5% on the top line, which matched our expectations. But we had a number of, I think, very positive updates on the quarter. You know, as it relates to our operating expenses and the way we've been managing the business, we were able to reduce our cash burn from north of $30 million to less than $15 million in the quarter. EBITDA loss went from $16 million to about $7 million. We've made some significant improvements over the last nine months or so in terms of headcount reduction. We shuttered one of our manufacturing facilities. And importantly, a lot of these improvements in our operating structure have been while we've been investing in the United States.
So, you know, all of those are net of what we've been doing as we've been preparing for the launch in the United States. We gave some very positive metrics on the United States and some of the early experience there. We've been on the market for about three weeks as of when we reported, and we already had over 250 accounts we'd signed up in the United States, 70 of which had ordered from us. We were onboarding 15-20 new accounts per day. So the U.S. is off to a really strong start. We also announced that we had shored up our balance sheet. We had brought in some additional capital, that was led by the Qatar Investment Authority. We put in $30 million plus a couple of other investors, and we brought in about $50 million.
We also updated our financial forecast. So we gave an initial outlook for 2025, which rolls up to about 25% growth for us overall as a company, being driven mostly by the United States. So again, you know, think a very positive update, you know, for the company and setting ourselves up for a really good 2025.
Yeah. And congrats on the FDA approval. I know that was a long time coming. Maybe take us through, you know, that process, over the years and how it sets you guys up for success going forward.
Yeah, of course. So in 2010, when we went to market, we started in the international market. And, you know, we grew in a very entrepreneurial fashion, but we always continued to innovate. So pretty much every two years, we brought out a significant innovation that has gone to market. And, you know, by 2015, we realized that we needed the capital necessary to be able to go under the PMA process because it's an investment over $50 million. So once we were able to do that, we started our clinical trial. Basically, you know, these are over 800 patients that are being followed in different cohorts for aesthetics and reconstruction.
You know, we announced our three-year results last year and our four-year results of the study this year with numbers that have never been seen in this industry, basically an order of magnitude better than everyone else. With that, you know, the FDA on September 26, you know, gave us the approval for the PMA. On top of that, you know, we also have a clearance for our tissue expanders that are used in breast reconstruction. Now we are playing in the aesthetic space with Motiva Implants and with our Motiva Flora tissue expander in the reconstruction space.
Gotcha. Yeah, it's very impressive. I think, the aesthetic space in particular is one where, product safety and product efficiency is very much valued and very much in process in terms of the industry as a whole. Could you talk about some just general operating initiatives that you guys have emphasized to deliver such good clinical results and safety from a product and technology perspective?
Yeah, when we started, you know, our work in R&D and the development of this technology, we created this patient-centric risk-benefit analysis. And what that allowed us to do is to make sure that we were, you know, making the right decisions when, you know, putting these products together. So one of the most important things is what we've done in surface technology. So we have this patented surface architecture that basically is low inflammatory. Because it is low inflammatory, you know, not only you are reducing the risk of capsular contracture, which is basically your body's, you know, overreaction to a foreign object, so you know, if you look at our rates of capsular contracture, in our, you know, primary augmentation cohort in our study, they're less than 1%.
If you look at our post-market surveillance, now at 14 years, almost 4 million devices, also less than 1%, very consistent. But beyond that, you know, what this surface technology allows is to put the implant, basically above the muscle and not behind it. So if a surgeon believes that there is no need to put it behind the muscle, then they have new options. And of course, in aesthetics, you know, women are very active physically. Do they want to sacrifice their pectoralis muscle unnecessarily? Of course not. So it's creating these new options and, you know, this new level of softness that is, you know, in the outcomes in breast aesthetics so important to patients. Beyond that, I think, you know, one of the most important things we did is create this very strong foundation for our implants. It's called a Monobloc.
With that, basically through better chemistries, better manufacturing processes, we are able to reduce the re-operation rate for implant rupture. Again, now at 14 years and also in our U.S. clinical study, rupture rates of less than 1%. That's, you know, how this company is making a difference all the way, you know, to now, you know, bringing to market outside of the United States minimally invasive, you know, breast aesthetics, which is game-changing in every sense of the word.
Yeah. That's great. Maybe pivoting to commercial strategy. I know you guys just received FDA approval, so the product launch is underway, but maybe touch on your guys' commercial strategy efforts as you think about different markets globally from Asia, Latin America, the U.S., etc.
We're now in over 85 countries all over the world. You know, we launched in China earlier this year and now the United States. So we're truly now a global company when it comes to our commercial footprints. And, you know, one of the most important things is that, after several years in each market, what we see is that this technology is changing the way surgeons are, you know, doing their procedures. And more and more surgeons are, you know, asking for our products and, using them day to day. So that market leadership, of course, has been taking place around the world. And, you know, we believe that with our strategy in the United States, it's a matter of time, you know, until we reach that market leadership. So, you know, we've been hiring the sales reps since our launch.
We are now at 32 sales reps. Before the end of the year, we should be at 40. And next year, we will add every quarter more sales reps as needed to, you know, to command our growth and eventually achieve market leadership.
Great, and looking into 2025 on the commercial side, what key themes are you guys on the lookout for, whether it's consumer appetite, physician activity, really anything top of mind for 2025 across the market?
I think one of the most important things is that, you know, in the last 18 months, there's been a particular, you know, softness in many markets around the world. Yet, you know, in our core business, we will grow this year in, you know, Europe, Middle East, Africa. We will grow in Asia-Pacific. Latin America has been the most affected by, you know, macroeconomic conditions and especially Brazil. You know, if you look at, you know, even within those macro pressures, we've been able to deliver good results this year. Of course, next year, the opportunity will be for the, you know, LATAM region to improve.
But, you know, we are being very careful in the way we are establishing our plans for next year because we have many potential upsides when it comes to our minimally invasive platform, markets, you know, continuing to stabilize and us continuing to take market share on top of what we can do in growth, new growth in China and the United States.
Gotcha. That's great, and I guess we just had an election last week. As we move into a Trump administration more on the supply chain kind of manufacturing realm of things, you know, how do you guys expect to manage that? And what expectations do you have just from a supply chain, you know, Trump administration, perspective?
I think one of the most important things is that, you know, all of our manufacturing is consolidated in Costa Rica.
Mm-hmm.
Costa Rica has become a hub for med tech manufacturing, you know, for companies across the spectrum of med tech. And, you know, what we do is we import many of our raw materials. In fact, our most important raw material comes here from California. And, you know, with that raw material, we are, you know, processing it and eventually getting the silicone implant technology that we then export around the world. So, you know, we don't expect any particular effect in our business. You know, these are medical devices. I don't think there's an appetite to tax health. And definitely, you know, we are ready to continue, you know, improving in our manufacturing efficiencies in our two manufacturing plants in Costa Rica.
Gotcha. Makes sense. And you touched on the point around minimally invasive technology products that you guys have. That's been a very, you know, common theme is just general medical devices advance themselves and innovate. Could you touch on that? I think the Mia Femtech is a key product within your portfolio, but how do you guys see that playing out the next couple of years? Do you expect it to be growing quite a bit as consumers look for minimally invasive, user-friendly technologies?
We absolutely believe that minimally invasive is going to take over, you know, breast aesthetics. It has already taken over aesthetics in general. What you see is, you know, a move from the more invasive to the, you know, minimally invasive or non-invasive. So consumers are demanding that. In breast aesthetics, there just wasn't the technology there for it. And what we did, we started this program 10 years ago. And over the years, we've created, you know, a different chemistry so that these implants can be injected, basically. And we use a balloon technology to create the space. And then, you know, our implants are made in a way that they can be safely deployed through a very small incision. And that allows for, you know, not only moving away from general anesthesia, the recovery is, you know, unheard of.
Basically, women minus the exercise are keeping their lifestyle and, you know, it's a different, you know, also a set of efficiencies for the clinic because these procedures are taking 15 minutes. The patients are quickly discharged, so it helps them a lot in the way they're thinking about it, but you know, our market research shows that eventually, you know, in terms of number of procedures at peak, minimally invasive should be as important as the current market that we see. Beyond that, you know, we've been able to prove that this is a new category, that, you know, there's a willingness to pay that is much higher, 30%-50% in our year one in the clinics that are doing Mia.
On top of that, the consideration time goes from two to seven years in traditional breast augmentation to less than two months in minimally invasive. And beyond that, you know, there's the market expansion. You know, in our first year, more than 40% of the patients were not looking for a traditional breast augmentation. And in a market that has been pretty flat for the last 20 years, that's really exciting.
Yeah. Very, very exciting. Maybe, pivoting to just growth as you guys look forward, can you share kind of some perspectives on growth strategy, whether it be, you know, organic R&D innovation, whether it be M&A, what's kind of top of mind as you look over the next couple of years?
What we see is that, you know, our focus in breast aesthetics and breast reconstruction is based on the technologies that we have at hand and also this very rich organic pipeline that we have created over the years, so, you know, we've been really good at understanding market needs, and because of that, we've developed things like, you know, minimally invasive. Our tissue expander technology is the only tissue expander that is out there in the market that allows for MRIs during the expansion process of the breast reconstruction, so these things, you know, are changing the paradigms, and as we think forward, we believe that there's still a lot of growth that is going to come from breast aesthetics and breast reconstruction. We also have a program for what is called gluteal aesthetics, Gluteal Ergonomic Modeling.
Basically, you know, there's about 800,000 of these procedures every year around the world, but there's no good options. In fact, you go from not only having a morbidity rate, but, you know, pretty much a 100% re-operation rate in those indications, and with our minimally invasive program for, you know, Gluteal Ergonomic Modeling, we believe that we will be able to create a new market, so we are currently, you know, in a clinical trial. And, you know, as that, those results come, we feel very enthusiastic about what it can become in terms of growth for years to come.
Gotcha. And as we think broadly about, I think you guys quote about a $2 billion-$2.5 billion TAM, just as you think about the women's health aesthetics market that you guys operate in, do you expect over the next couple of years the growth in the market to be uptake in new customers, new people using your technology, or is it taking market share from other folks? What's kind of driving the market going forward as it grows?
I think there's a lot of space for us to take market share from our peers, especially here in the United States and in China. Those are the two largest markets in the world. You know, basically with the approvals that we've gotten over the last year, we're basically tripling our TAM. There's a lot of growth ahead on that side. Then, yes, the market expansion that can take place from, you know, minimally invasive, both in breast and also in gluteal, those are fundamental to, you know, what can happen in terms of, you know, real, fresh, healthy growth for the years to come.
Gotcha. And maybe thinking even longer term, the next 10, 20 years, what does that look like for Establishment Labs?
I think you know, we continue to innovate in every sense of the word. You know, our programs are transforming plastic surgery. We think that there's a lot of space for growth in plastic surgery. If you think about, like, the effect of GLP-1s in aesthetics, you know, there's a limit to what you can do to patients that experience, for instance, facial wasting after having, you know, Ozempic or other GLP-1s. You know, you also have breast wasting. You have gluteal wasting. Those patients, they become aesthetic patients. There's, you know, a limit to what you can do with non-invasive. There's a big opportunity with what you can do in plastic surgery to give the level of efficacy that these type of patients need.
So we think that there's going to be a lot of opportunities in that space. And of course, you know, being a company that is already in plastic surgery, we, you know, we expect to create technologies that will address those needs.
Gotcha. Let's see what else. Maybe as you think about guidance for the next year, I know you guys disclosed that, within your last quarterly earnings, but anything else, you want to share?
Sure. You know, when we gave a first outlook for 2025 on our call last week, you know, importantly, it wasn't guidance, right? It was an initial outlook that we provided, for a couple of reasons. You know, the first being that it gives us a conservative target against which to budget. So part of what we've also guided towards is that we expect to become EBITDA positive next year and then cash flow positive the year after. And so as we looked internally at the types of revenue that we needed in order to build an operating expense base against that, we set out with what we view as a very conservative target for 2025. And what's incorporated within that is mid-single digit growth outside the United States and then a minimum of $35 million in the United States.
But as we think about that outside the United States piece, I think it's important that that mid-single digit guidance that we gave is a very conservative first cut at it. You know, as Juan José noted, there are still some challenges in the market in certain areas, Latin America being the major one. We've assumed no recovery there. You know, we're assuming that the markets generally are performing as they are now, which is frankly okay. You know, we continue to take share, but we're not assuming a strong recovery, so we've set what we believe is a very conservative start to next year, and frankly, we expect to exceed it as we move into next year.
Great. What else, what else should I be asking?
I think it's important to understand our path to profitability. Raj at the beginning was, you know, mentioning all the improvements in terms of the financial metrics. You know, on top of that, I think that all of those improvements have happened at the same time that we are heavily investing in our U.S. launch. Beyond that, you know, the U.S. has the highest average selling prices for our products in the world. You know, when we think about the future, it's improving gross margins, improving, you know, revenue, more efficiencies. That's how we get to our first EBITDA-positive quarter next year and then, you know, into profitability in 2026.
Mm-hmm. In terms of getting to profitability, what are the, I think, key initiatives that you guys are most focused on internally? Is it product launch? Is it commercial?
Yeah. I think as Juan José mentioned, we've been doing a lot of internal efforts over the last, you know, nine months to a year, really getting the business in a much more efficient footing, essentially, and we continue to do things. You know, as we mentioned, we closed or decommissioned one of our manufacturing facilities, just a month or so ago. We were reducing headcount. We've been really focusing the organization on the areas that are offering the best return from a growth perspective. And that will continue. But you can't overlook simply how important the launch in the United States is. You know, as Juan José was noting, the ASPs here, you know, are significantly higher than any place else in the world for us.
Yet the cost of manufacturing a product for the United States is essentially the same. And so you'll see a very pronounced improvement in our gross margin as we get bigger in the United States. And as we right-size the organization against that, you know, the profitability will start to come through.
Great. Any other closing remarks?
I think that, you know, when we think about 2025, we think about a year in which all of the things that we've been working for over the last 20 years since the founding of the company, you know, really come to life. You know, this ability to sell into, you know, the United States, highest average selling prices in the world for us as a direct market. China, highest average selling prices in the world for a distributor market. And all the things that we are doing to improve our efficiencies are, you know, innovation pipeline is organic. We don't need to go out there to buy anything for it. So all of these things will come to play in 2025. And, of course, we're taking a conservative outlook because we think it's the right path for, you know, for our planning.
But absolutely, we believe that, next year is going to be a real watershed moment for our company in the execution of our strategies.
Great. I think it's a great place to wrap it up. Thank you guys for joining us.
Thank you very much.
Appreciate you taking the time.
Thank you.