Hi, everyone. My name is Rohan Patel. I'm the medical device analyst at JPMorgan. It's my pleasure to have the Establishment Labs management team with us here today. I'd like to bring up Juan José just to give an opening presentation, and we will follow it by Q&A. Thank you.
Thank you, and good afternoon. I want to talk to you about Establishment Labs. We are a women's health company dedicated to breast aesthetics, breast reconstruction, and plastic surgery. Last Monday, we made an announcement in which we talked about me moving into a different position in the company. It is very important that I reiterate that I'm not stepping away. I'm stepping aside. I'm going to be very involved in the company, helping the company with the technology pipeline and also with the very important evangelizing of the plastic surgery community so that they adopt the technologies that we are developing. So, to me, it's really important to also reiterate there is no business issue with the company. Today, we are providing guidance for 2025 of $205-$210 million.
Out of those, $170-$175 should come from the international market and $35 million, at least, from the United States. We've entered the 2025 in the United States with a $25 million run rate. It's important to remember that Q1 and Q3 in the United States have seasonality. Outside of the United States, that means a mid-single-digit underlying growth. We also expect gross margins to be trending higher, driven especially by higher ASPs in the United States and our minimally invasive platform. We expect to turn EBITDA positive in 2025, and we feel our balance sheet is secure after a recent capital raise. Beyond 2025, you can expect us to grow at more than 20% a year for at least the next three years. There's a continuous focus on the company, on the road to profitability, with a focus on efficiency and healthy growth.
We expect to achieve cash flow positive status in 2026, and we are on a clear path to becoming the global leader in breast aesthetics and breast reconstruction, and we are also, and this is very important, leading the transformation of all of breast surgery towards minimally invasive with Mia and Preservé and a new vertical that I'll talk about called GEM. Last October, we turned 20 years since I founded the company in my parents' house. We have now more than four million devices that have been placed in the market since 2010, and with a track record of less than 1% device-related complications. We have over 210 patents in more than 20 patent families, and now we're getting very close to 150 publications and peer-reviewed journals. Our products are present in more than 90 countries, including China and the United States.
I want to remind everyone of the importance of the Motiva FDA clinical trial. We presented the four-year results, including an MRI cohort, last year. This year, we will present the five-year results, but I think the important thing is to note that everything that we've seen for the last 14 years in the OUS market has been validated by this study. Capsular contracture and rupture, which are device-related complications, sitting at 0.5% and 0.6%, and most importantly, these results remain the same at two years, three years, and four years. And when you compare that to the results of the other trials from our competitors, it's a completely different trajectory, an order of magnitude different, at least. Now, on to the United States and our recent launch.
We have now hit more than 2,000 cosmetic orders, and we continue to add orders from hospitals that are using our Flora Tissue Expander, now at 32 different hospitals around the United States. We have opened more than 500 accounts, and more than 300 accounts have ordered. Over 225 accounts have reordered, and we continue to open five to seven accounts per day. There's usually a lag of about a month between signing the account and the first order. And we were able to get $3.2 million in revenue for Motiva since our launch in early October. One of the things that has amazed me the most is how the plastic surgery community in the United States has embraced Mia. Motiva is now in all of the communications that these clinics are using to drive in patient demand.
One of the things that we have heard from plastic surgeons is that patients are coming in, and for the first time ever, they're saying, "This is what we want. We want Motiva." This is very important for all of us. All of these are organic. You're going to see us doing a lot more to get the word out there around our technology. This is a U.S. pipeline. So we already have a supplement for the addition of more sizes to the Motiva Implant Matrix. Also, this year, we will be presenting 510(k)s for all of the tools that are needed for a minimally invasive system, and that will allow us to launch Preservé in 2026. Also, we are expecting in 2026 the approval of Motiva for breast reconstruction indication and revision reconstruction indication.
And beyond that, we will get our supplement for our Ergonomix2 platform, and that will allow us to fully launch Mia FemTech, which is this amazing injectable implant that is used in minimally invasive procedures. So what I think this means is that you're going to witness a super cycle of innovation in the United States when it comes to breast aesthetics and breast reconstruction over the next few years. Now, what is the importance of minimally invasive? As you know, minimally invasive has transformed completely every surgical specialty where it's gotten to. And when you think about what we created in the last 10 years through all the science, all the engineering, all the work that we have done, is this platform in which we can bring true minimally invasive into breast surgery.
These are the results of our Mia FemTech study at three years with a 93% follow-up rate. And it's, again, very interesting to see that the device-related complications are now at 0% for capsular contracture, 0% for rupture at three years. Now, one of the most important things in the other complications, technique-related complications like inferior malposition sit at 0%. With Motiva, that was historically the biggest concern from surgeons because our implants don't really create a capsule. They have a low innate immune response. But with the tissue preservation that is done with the Mia technique and minimally invasive, we are able to fully eliminate any problem around those. Now, some of the interesting learnings from year one with Mia FemTech is that we were able to show a true market expansion.
42% of women that came to these clinics were new to the category, meaning they were not seeking a breast augmentation before they learned about Mia. Now, the interest level is very important as well. We have two times the engagement level that we see from our competitors that are doing traditional breast augmentation, and also, Mia creates a simple decision tree. Women who become aware of Mia, their consideration time is as low as two and a half months, and that is particularly important when we think at the rest of the industry at three to seven years consideration time, so when we think about a market that has been stagnant pretty much for the last decade, Mia provides all the fundamentals to have real market growth. Now, nine out of 10 patients that get Mia are willing to recommend the procedure.
And the other part that is amazing for the clinics is that they are getting 30%-70% higher economics when they do Mia than when they do at the same center a traditional breast augmentation. And that is particularly important. For instance, I'll give you an example. Last year, several of our clinics around Europe experienced, like the entire market, a year of either stagnant or lower demand. But they were able, because of Mia, to grow their breast practice by more than 50% and all the way up to 80%. And this is why Mia is so important. Now, we've proven the model. We can grow the market. We can have an amazing experience for patients. And now, in year two, in 2025, it's about expanding massively the number of clinics.
We started in the Q4 our Mia Light program that provides easier, faster access to clinics to Mia. Just in December alone, we were able to sign 17 clinics. Now, we have more than 100 surgeons that will be able to do Mia in 2025. Our expectation is to add up to 200 clinics by the end of the year so that we can massively move that combination of the new category, the market growth, and the number of clinics in 2026 and beyond. Now, with Mia, also, you get this amazing organic communication around all the benefits that you have with this procedure that you can almost think about it as a replacement padded breast procedure. We've been able to create an amazing community of surgeons who are talking about Mia. They're no longer advertising just their practice. They're advertising Mia at their practice.
This is fundamental for the future of this sector. Now, we are expanding our Motiva minimally invasive platform beyond Mia FemTech, with which you can do breast harmonization or the scarless lift. You can also now, with Preservé , be able to do more than two cups up breast augmentation, two, three, and even four cups up breast augmentation, revision augmentation, mastopexy augmentation, and hybrid augmentation. Those are the bread and butter of the clinics in the day-to-day. So you can think about Preservé as minimally invasive for the day-to-day. From the regulatory umbrella, it actually is an extension of Mia. It comes under the same regulatory process, and we are able to provide with the Ergonomix2 round implant, bigger sizes, so that we give access to more clinics.
So as we move into 2025 and beyond, what you're going to see is that minimally invasive through Preservé is going to impact so many clinics around the world. Our plan is to launch Preservé in Europe and Brazil in the first half of this year. And beyond that, we have GEM. GEM is basically the application of minimally invasive with its tools and the Ergonomix2 Diamond implant for gluteal ergonomic modeling. There's about 800,000 procedures a year for gluteal aesthetics. Yet, almost every single technology out there is creating rates of reoperation as high as 100%. There's even a mortality rate in gluteal aesthetics. So we plan to address this with GEM, and we are very happy with the results of our trial. Now, we are in the second leg of our study, and soon we will begin the third one.
So the idea is to seek regulatory approval in 2026. Now, you can think about Mia as being a minimally invasive experience with tissue preservation. Preservé is breast surgery with tissue preservation. Both of them are minimally invasive. So the value proposition, as I was saying, is one of the fundamental things here to understand is that Mia will be market expansive, and Preservé will be for the day-to-day. It really gives a lot of opportunities for all the surgeons and the practices to be able to adopt minimally invasive. And this comes at a higher price point, but the surgeons are willing to pay for it because it's easier for them, and it's easier for the patient.
And at the end, that's what's going to drive over the next few years the adoption of minimally invasive breast surgery. It's been 20 years working as a founder of Establishment Labs. I'm very happy about all the things that we have been doing, and I'm going to stay very involved because I care very much about this company. I'm one of the largest shareholders, and I will continue to be involved in many different capacities, including as a board member, but most importantly, helping the company bring minimally invasive to the global population of plastic surgeons, and beyond that, helping the adoption of these new technologies, not only by plastic surgeons, but also by women worldwide. Thank you very much.
I'm going to just move on to a few questions now. I think, JJ, thanks for the presentation. Obviously, I think what's top of mind for a lot of people, and you just mentioned it, is your retirement as CEO of the company. I guess just to ask, why is it the best time now? It seems that there are a lot of compelling growth drivers, market expansion, pipeline opportunities. So what's the motivation for stepping down at this time, and what gives you confidence in the future of the business and just the health overall?
The timing is mine, based on what I've been seeing over the last year, which is that the company's growth, the size, the complexity of the business needs a more experienced hand in terms of being able to manage that and a road to profitability. So I think over the last 14 months working with Pete, he helped us with the restructuring that we underwent at the end of 2023. Based on that very positive experience, we named him president. And since he became president, we've been working this way. And Pete has been taking over basically the entire operations of the company, and I've been focusing more and more in the two things that you were mentioning, this amazing technology platform. And the other part is helping with the U.S. launch.
Just in the first half of this year, there's going to be over 10 delegations of U.S. plastic surgeons coming to Costa Rica. I'll be hosting them. These surgeons come interested in Motiva. They leave as fans of the company. And beyond that, my participations in medical conferences run by plastic surgeons around the world, that's super important. So we're kind of like formalizing what we've been working on for the last six months already. And I think I need to focus on those two aspects. I'm an entrepreneur at heart. I'm very good with technology. I'm very good with the plastic surgeons. So that's what I'm going to be focusing on. And Pete is going to be focused in basically bringing this company to new heights. So I'm actually very much looking forward to this new phase.
I think in a way, I feel comfortable already because we've been working together in a very collaborative, positive way and beyond that, I think it's the right move at the right time.
Great. No, thanks for that, and Pete, maybe I'll just give you the floor for a minute to just talk about your priorities moving forward and kind of what you plan to do right out of the gates to really kind of keep growth accelerating and keep the business on track.
Yeah, thank you. So I've been involved, as JJ mentioned, with Establishment Labs for the last 14 months. I got involved in November 2023, really focusing around optimizing the cost structure, right-sizing the business, reducing a lot of the operating expenses so we can really get in a closer position to profitability, and as JJ mentioned, then in August last year, he appointed me as the president, so on a full-time role, and I've been really focused on making sure we have the right operational discipline for this business so we can achieve not only the financial objectives, but we do deliver to our patients and our customers on a global basis, so when you look at Establishment Labs, it's a fairly complex business for the size of the revenue. We're in 90 different countries. We have direct businesses. We have distributor businesses. And we're also based in Costa Rica.
So it has a lot of complexity on a global scale. And a lot of my experience historically, I've worked with multinationals. I've been with Pfizer. I ran their North American business for a number of years. I also ran their European business. And I've been a GM in a number of markets around the globe. So I have a lot of experience operating in a fairly complex environment. And where we are today is JJ, as he mentioned, he's going to continue to focus on the things that he's exceptionally good at. And we see the benefits of that around innovation, engagement with KOLs. And it's going to be my role to continue to run the business and ensure that we deliver and we execute, that we do deliver on our commitments. So it's not going to be from a strategic standpoint. It's not going to be any changes.
It's really going to be around the execution.
Great. No, that's really helpful. I guess then just pivoting a little bit, I want to talk about you obviously pre-announced good results in the quarter, $44.5 million-$45 million. And U.S. Motiva sales of $3.2 million came ahead of expectations. So maybe can you talk through some of the drivers in the quarter between the U.S. and maybe potential stabilization in Latin America and recovery trends in APAC or EMEA as well, just what you're seeing kind of exiting the year and into 2025?
Oh, sure, I'll take that one. Yeah, so if you look outside the United States, as you noted, I think the trends were really as we expected in the quarter. We continue to see softness in Latin America, though I think it has stabilized somewhat, but that market remains quite challenging, and we're seeing decent performance out of EMEA, so Europe and Middle East, as well as out of Asia-Pacific, really as we expected. I think importantly, we also absorbed more currency in the quarter than we expected. If you look back to when we gave the Q4 guidance, the dollar strengthened pretty dramatically as we moved to the quarter, and so we ended up about $250,000 to the negative on currency, but yeah, we were still able to achieve our numbers, so I think it speaks to kind of the health of that business outside the United States.
In the U.S., I think the 3.2 million and some of the metrics which Juan José put up really kind of speaks to the demand we're seeing in the United States and really the strong initial reaction amongst the clinical community of what we're bringing here. As you can see in those metrics, again, the trends remain very strong, and we're really not seeing any slowing.
Great. And you also obviously provided first-time guidance now for 2025 as well, $205 million-$210 million, $35 million in U.S. Motiva as well. So maybe if you could just talk about what's assumed in the guidance at the low end, at the high end, maybe anything you can provide as far as color in the U.S. that kind of goes into that $35 million number just with respect to market growth or share capture and the split between augmentation and reconstruction, that would be helpful.
Yeah, I think when it comes to the U.S., I've never seen a Motiva launch, and we're in more than 90 countries, begin so well. I think it's not only the speed at which we are signing accounts, it's the speed at which these accounts are scheduling new cases. So, the speed at which we get the first order, in the speed at which they are reordering. All of that coupled with the messaging from these clinics in the outreach to potential patients. So I think it's a phenomenal show of force by our U.S. team led by Jeff Earhart. He's assembled a dream team of sales reps, and it's really showing in our numbers, and one of the important things from today is we're saying that we're starting the year at a run rate of $25 million.
And of course, there's seasonality in Q1, but it really shows how driving towards that $35 million number is more than achievable. And of course, our team is going to be devoted to do that and more. But I think it's a fundamental difference from what we saw in the last couple of years where the markets OUS had softened, and we didn't have yet the U.S. approval. Now with the U.S. approval and also the expansion of minimally invasive, I think we're set up for years of very healthy growth.
You talked to the 500, I think, surgeons. I think last week in November, you said something around 300. What's the expectation in 2025 for that number? I know you're adding quite a bit of surgeons every day, so.
Yeah, I think it's the number of accounts that we're adding and then also the speed at which that's happening. But at some point, I think the second phase becomes more about as we continue to add new accounts, we also focus a lot on the reordering rates because that's what's going to get this business to scale in the United States, and it's going to show the commercial success. And that is based on patient outcomes. And I can tell you our biggest customer today is a group of 13 clinics, and they have over 25 plastic surgeons. And I was talking to the two main plastic surgeons over the weekend, and they're telling me this is having a great impact in our practice. So that's what we want to hear because that's what's going to drive these surgeons and their peers, their friends to become Motiva enthusiasts.
I guess just to play devil's advocate a little bit, if I'm a physician that may be hesitant to transition to Motiva, what would be the driving force behind that psychology, I guess, from your perspective? How can you overcome the barrier?
Well, I think it starts with the safety. I mean, I just showed the numbers in terms of device-related complications compared to each one of our competitors. So it begins there. And then there's the new options they have in terms of the aesthetic outcomes. You can place these implants safely above the muscle. For a generation, U.S. plastic surgeons have been placing implants behind the muscle because they want to lower the capsular contracture rate and the possibility of rippling, of implant rippling that can lead to a reoperation. So being able to give that option when and if possible to women who are very active physically, it's a big win. So also the last part is the awareness level. Normally, it takes us a couple of years to get women aware enough so that they go into a practice and ask for Motiva.
We're very happy to hear from the plastic surgeons that they're already early in the launch, hearing these from these patients.
There were quite a few, I think, kind of updates and timelines that you had in the slides. And forgive me, I don't remember all of them off the top of my head. But a lot of it had to do with the kind of shift to minimally invasive and specifically a lot of your new products coming out just globally in that space, starting with Mia. So maybe if you could just talk about the strategy there and maybe just refresh us on the timelines for launch in some of your OUS markets as well as in the U.S over time.
Yeah, I'll begin with the U.S. pipeline. I think it's important that we are already underway with adding new sizes to our Motiva implant matrix. So that should happen in the near future. Beyond that, we are basically seeking for clearance of our tools that are necessary for minimally invasive. And that would allow us, next to the Ergonomix implant that is already approved, to launch Preservé in 2026. With our reconstruction indication, the trial has been going on for quite some time. It got delayed during the pandemic when hospitals stopped doing breast reconstruction. But we are going to hit the three-year mark that is necessary to present that data to the FDA this summer. So after that, we'll present the data, which is looking pretty good. And then in 2026, we will be able to launch with that reconstruction indication.
Of course, at some point, we are going to receive the approval for the Ergonomix2 platform. Within the Ergonomix2 platform, you have Mia, which is the injectable implant, full minimally invasive, done through the axilla and the amazing experience that it creates. Already now, every time we go to a plastic surgery conference here in the United States, half of the questions are about Mia. There's a lot of excitement around it. Overall, it's this idea of a super cycle of innovation that if you're a competitor and you try to respond to the first wave of technology that the U.S. surgeons are getting with Motiva, and then we have all these other things coming.
In the international market, I think most of these technologies have been already approved with the SmoothSilk around 14 years ago, 12 years ago, with Ergonomix 10 years ago, and as we move everyone towards minimally invasive, the good thing is that the regulatory umbrella remains the same, so Preservé is kind of like a Mia Plus, if you will, and the shift will take time, but I mean, again, it's important to emphasize how a surgical specialty is impacted by minimally invasive, and we are the only ones to have minimally invasive, and you need some time to be able to work on a real credible alternative to it.
That's helpful. And I want to pivot back to Raj, I think, for a few more questions just on the financial outlook and specifically profitability in Q1 Obviously, you mentioned potential seasonality in the Q1 . And so just maybe from your perspective, how are you thinking about cadence throughout the year? What's driving the trends, especially down the P&L as well? If you could talk a bit more about the Adjusted EBITDA profitability target and when you expect to reach that.
Sure. If you look back in 2024, and with help, you look at the expenses we took out of the business. As we saw the slowing in our end markets, as we in the middle of 2023 and into 2024, we made a lot of changes in terms of our expense base. And we got the business outside the United States actually very close to EBITDA profitability in the middle part of last year. And you saw that in our adjusted EBITDA numbers that we reported. As we've now moved into the back half of 2024 and into 2025, post the FDA approval, we've stood up a commercial operation in the United States, right? And so a lot of that spending has now been in the Q4 and will continue into the Q1 . But that base of expenses relative to the U.S. commercial organization is relatively set.
We will see a little bit of increase as we add a few more reps and some activities and things. But the majority of that spending base will be put in place here by the middle of the Q1 . And at that point, as you move through the year, it's about the ramp in the U.S. revenue and the really strong gross margins and profitability that we get from that revenue. And as that starts to flow against that relatively established expense base, that's when you'll start to see the profitability flow through. And our expectation continues to be that we'll achieve an EBITDA quarter as an entire company at some point here in 2025.
Great. And I guess I know the U.S., obviously a lot of the conversation is dominated by kind of your launch into the U.S. It's the biggest market for you, highest volumes, good ASPs. But I think just wanted to talk a little bit more about some of the other OUS markets and where you see real potential for not only expansion, but recovery in the near to medium term. Obviously, I know China is still a bit challenged, Latin America similarly. So if you could just talk through where we could see kind of the biggest inflection over the next year or so and what gives you confidence, I guess, just from your on-the-ground visibility as well as just your confidence in those markets.
I think when we talked about the growth OUS in 2025, what we were talking is mostly that growth coming from Europe and Asia-Pacific. These are trends that are already ongoing. We saw it on the 4Q numbers. Latin America, we don't have a plan for that market to recover strongly this year. That is going to happen more in 2026 and beyond. Minimally invasive is going to allow us to also upsell into accounts in the future. When you look at the numbers that we gave today, it doesn't really include the launch of Preservé. We haven't launched. As that happens, we will update on the outlook from minimally invasive.
But absolutely, when you think about the next few years, a lot of the growth is going to come from minimally invasive, not only from the price point, but our ability to get competitor accounts to move that way. I'll say something about China, though. I think it's important to understand in market the size of China. Year one is more about deploying the operations, putting the inventories in tier one, tier two cities, even some tier three cities, starting the medical education, the surgeon outreach. And year two is more about creating the in-market demand. So I think that's going to be the focus this year with our exclusive partner, Motiva China. And one of the great things with it is that they were able to secure a line of $50 million.
So that gives them the necessary resources to grow that market for Motiva over the next few years. And let's remember, all of these other markets near China, Japan, Taiwan, Hong Kong, Singapore, Thailand, in all of those markets, we took over from the incumbent. In China, the current market leader is J&J with about 70% market share. So we know what we need to do. So it's more about the execution, but we're going to be working closely with our partner to be able to make that a history of success, just like the rest of Asia. So importantly, we do think we're going to grow China this year, but the revenue that we are going to recognize will only start flowing through us because they're a distributor in the second half mostly of this year.
Do you have, I guess, any more specifics on what that could look like? I know you talked about kind of 10 million was your target for 2024. Anything else you can provide on just?
So most likely it will be less than that this year and more next year. I think that's the way to think about it because that's the natural dynamics when you launch in a market that big.
I think as JJ mentioned, that's a natural evolution in any distributor market. But a market like China is quite large and it's significant scale. And it's going to take time to do that. And I think we're just working on developing the number of procedures, getting the sell-through. And then we're going to see a lot of the sell-in the back half of this year.
I guess pivoting a little bit to the recon side, obviously this gets a lot less attention, but how should we think about the opportunity for that, especially in the U.S. over time? How much traction are you getting without the implant and just Flora?
So it's many important things that are there for us in terms of breast reconstruction in the United States. For the tissue expander, we're talking about a market that is about $180 million. When it comes to the breast reconstruction on the implant side, it's about 100,000 implant-based procedures. On average, 1.7 implants used per case when you're doing a contralateral symmetrization. And that gets us to about the same number, $180-$200 million because they're sold at a higher price point in breast reconstructions through the insurance process. So as we get the reconstruction indication for the Motiva implants, we will be able to sell through more of the tissue expanders. So I think over time is a phenomenal opportunity. But more importantly, I think it's also the ASPs, the gross margins that we are having.
When we sell a tissue expander in the United States, we recognize about three times the revenue we're recognizing currently in Europe. So it is an amazing opportunity. And beyond that, it is also like the credentials of the company as a women's health company are better shown in that market. So we will continue to work to get the approval so that we can use that as a source for growth in 2026 and beyond.
Great. And I think we have a few minutes left, but I want to be conscious and kind of give you some time to maybe leave investors in the audience with kind of your last remarks as CEO at the conference and anything else that we didn't touch on that you'd like to talk about.
No, absolutely. And thank you for that. I think it's important to say several things. I founded this company 20 years ago in my parents' house. And this journey has been a journey in which we have shown what technology can do to completely transform an industry. And we've done that because we had a commitment to women's health from day one. And that's how we developed through the power of science and engineering all of these amazing technologies. But I think my decision to move; it's a decision that is based on how much I care for this company because someone like Pete can better run the operations of a company. And I can continue doing what I love the most, which is to impact with technology this field. We are moving into gluteal aesthetics, which will be a new thing for us in the next couple of years.
We are expanding into breast reconstruction with new technologies. So all of these things talk also about the financial future of the company because we have a road to profitability. And the road there is driven not only by the efficiencies that Pete and his team are working on. It's also driven by the fact that all of these products are sold at higher ASPs. In the past, we've been working perhaps in the countries that are the most difficult with the launch in the U.S. It gives us a critical mass to get there. And for me, this is a great new phase for the company. So I do expect to have us do quite well over the next few years. I would say that what happened this week and the overreaction, I think, from the market to my announcement is unwarranted.
I think that if anything, it's a great buying opportunity for our stock. I'm super confident of the future of this company. And again, as one of the larger shareholders, I would like to see this be reflected in the value to investors.
Great. Well, thank you so much, and I wish you the best of luck in the future as well.
Thank you very much.
Thanks for your time.
Thank you.
Thanks.
Thank you.
Thanks.