Raj, we could go? Yeah, yeah, we'd start. Okay. Good afternoon, everyone. Thanks for joining us here at the Stephens Conference. I'm Mason Carrico. I'm the diagnostics and medtech analyst here at Stephens. It's my pleasure to host Establishment Labs. Joining us from the company, we have Raj Denhoy, CFO. Great to have you here. Thank you for coming. Yeah, thanks, Mason. Appreciate it. Maybe just to start, we can be brief here, but if you could just give us an overview of Establishment Labs, why Motiva Implant is differentiated? Sure, happy to. So Establishment Labs is a medical device company in the women's health space. Over the last 20 years, we've developed and commercialized a number of technologies and products that have really elevated the standard of what women and plastic surgeons should expect from these devices. We focus primarily in the breast augmentation and breast reconstruction space. If you look at the clinical data on our products, you know, across a number of different types of data, right, from actual clinical studies, including the recent FDA study from registries, from our own warranty data, we've shown a consistently high level of performance of these devices where the rates of complication that we're showing are literally 10 times lower than what you can see with competitors' devices. You know, with that backing, we now sell our products in 85 countries around the world, most recently in China and the United States, which I'm sure we'll talk about. We manufacture all of our products in Costa Rica, and we really have a lot of growth in front of us, and there's a lot of new exciting things, which we'll, I'm sure we'll talk about over the next 30 minutes or so. Yeah. Maybe we start with the U.S. launch. You guys have had a strong start there. On Q3, you called out a number of accounts you've onboarded over 250, more than 70 have already placed orders. You were talking about the number of new accounts you were signing up per day. Can you just update us on how that's trending? Sure, yeah. We continue to see very good receptivity in the United States. You know, number of accounts now is above 300. You know, we continue to onboard 15-20 accounts per day. We've had over 100 accounts now have ordered from us. And so, yeah, it's exceeded even our really high expectations in terms of the early days in the U.S. Okay. And could you just remind us how many target accounts are there in the U.S.? So the U.S., there's roughly 5,000 plastic surgeons who do some level of breast surgery. Of those, roughly 2,000-2,500 of them do the majority of the procedures, so between 80 and 100 procedures per year in that group. You have some very high volume surgeons, you know, some that do north of 200, 300-400 procedures a year. And then you have a lot at kind of the lower end that maybe do a smaller volume per year. But there is a group, again, of 2,000-2,500 that are doing, you know, close to 100 procedures a year. Okay. From a commercial standpoint, you talked about ending the year with about 40 reps. How much reach do the 40 reps give you? Yeah, so we now have 35 reps, and, you know, we're on our way to get to that number of 40 by year-end. And I just want to point out, I mean, the reps we're attracting into the company are really the best of the best, right? So people that understand what is happening in this industry and the change that we represent. And so we're attracting really good talent on our sales organization. Jeff Ehrhardt, who leads that group and the team he's assembled, have really done a tremendous job in building out the United States. And, you know, they come from a long history of being in this industry, so they know all the good people, and we've been attracting them into our company. You know, with that number of about 40 reps, you can think about a rep being able to service anywhere from 20-30 accounts, right? So that kind of gives you a sense of what that group can do. We'll continue to add reps. You know, 40 is where we expect to end the year, but as we move through next year, we'll be opportunistic and continue to build that organization as we scale into the demand that we're seeing. Okay. And talking about these reps coming from, you know, they know the industry. I mean, how quick can a rep become productive? Yeah, and I think, you know, it varies a lot, right, obviously. And we're hiring reps who have experience in the industry, so have relationships with the plastic surgeon customers that we have. You know, and so again, you can see in the numbers that we're seeing, right? So even in the first, you know, we've been on the market for barely over a month, right? And to have already 300 accounts, 100 that have ordered, you know, the pace of orders that we're seeing, you know, so we're seeing a high level of activity, right? So as they're ramping up and getting these customers on board, the customers are ordering, and we're continuing to add more. And so that flywheel is really kind of picking up speed. Got it. And for the surgeons who have adopted Motiva into their practice, I mean, how should we think about the percentage of their volumes that shift over to you guys? Yeah, and again, it varies, right? So you talk about across the spectrum of surgeons, right? So, you know, initially, surgeons will, you know, they'll likely try the products, right, before they convert 100% of their business over to it. But what we've seen outside the United States is that over time, you know, surgeons typically move the majority of their business to us. You know, as they get comfortable with the differentiated nature of our products and the benefits of our products, it becomes hard to really justify using much else. I think you see most surgeons, though, don't want to, you know, have exclusively one product, so they may offer others and have others in their practice. But typically, you know, in most practices, you know, the women are involved in making the decisions, and oftentimes they're presented with the choices of the implants that are available, and they will, I think, increasingly choose ours. And so over time, you know, we'll likely start at a smaller base within these customer accounts, but over time, we expect to grow to become the majority share of most of our customers. Got it. And I realize we're pretty early in the process here, but what are you seeing in terms of a timeline from, you know, getting signed up to getting the training that they need to do a first order or something like that? Again, I keep saying it varies, right? But you look at the fact that we have, you know, 300 accounts now, the over 300 that we've onboarded, and over 100 have already ordered, right? So, you know, it suggests that it doesn't take long for these customers once they, you know, get into our system and get credentialed and able to purchase product, they're ordering, right, and they're trialing. And so that timeline is not that long. Okay. I think there's a lot of interest in our products. You know, I was just chatting with some of our sales reps. I mean, they describe, you know, surgeons reaching out to us, right, wanting to learn about the products. And you don't see that a lot in sales, right, where the customers are asking you to come in and to learn about your products. And so I think it just speaks to the fact that in the U.S. market, there really has not been any innovation for literally decades. And so we are coming with something that is, you know, not only new, but demonstrably better and different, and offering new alternatives to the types of procedures that surgeons can do. And it's really the interest has been, as I mentioned, you know, it's even exceeded our bullish forecast coming in. No, it's a good situation to be in. Maybe thinking about it from the supply side, you guys decommissioned one of your facilities. You talked about some potential supply constraints, at least near term. How's that progressing? Are things, you know, in line with your expectations? And could you talk about maybe the cadence of that falling off? Sure. So we manufacture all of our products in Costa Rica, and we, up until recently, had three manufacturing facilities that we manufactured out of. We had capacity. We still have the capacity to do well north of 1.5 million units per year, and we could expand that even further. We decommissioned the first of our three facilities in September, and as we've been moving the capacity into the other facilities, and we're looking at the demand that we're seeing from markets, not only the United States, but around the world, we're likely going to be a little short in the fourth quarter in terms of our ability to meet all of that demand. We should be through it very quickly in the first quarter. You know, as we mentioned on our earnings call, we've already added a third shift of manufacturing. You know, we're bringing in additional raw material. And so it won't take long for us to catch up, but we just wanted to be mindful of, you know, as we think about the fourth quarter and people's expectations. Got it. So it's not a situation where the $35 million next year could be constrained to something. No, we won't be constrained in terms of our ability to supply product next year. Okay, okay. Maybe with Motiva ramping here in the U.S., if there have not been competitive responses, what are your expectations around competitive responses? Yeah, I mean, it's hard to know, right? I mean, it's, you know, but if you play it out for the three competitors we have in the United States, you know, for Allergan or AbbVie, for J&J with their Mentor brand, and Sientra, the third player, you know, for most of them, the U.S. is the big market, right? It's where it's the biggest market in the world. It's where they generate most of their revenue, most of their profit. And so, you know, we expect there will be a competitive response, right? And so I don't know how to answer the question completely, but we're expecting it. We'll be ready for it. And I think, again, you look at what we're bringing relative to what our competitors have in the U.S. market, I like our chances. Okay. Maybe moving outside of the U.S., facing some macro pressures. How have you guys historically addressed these downturns from an operating expense standpoint? Obviously, U.S. investments will continue, but how are you thinking about that? Yeah, I think it's important to note, you know, that there have been some pockets of softness outside the United States, you know, over the last year or so. You know, Latin America being the major one, which we've called out where, you know, procedure volumes are down significantly. But a lot of markets are under a little bit of pressure, you know, either flat to down a little bit. But against those market dynamics, we continue to grow. We will grow this year in EMEA, we'll grow in APAC. Latin America, again, will be a drag. But in other markets, we continue to do well. We continue to take market share. And again, should not be surprising given the differentiated nature of what we're offering. But we are, you know, seeing some of these challenges in some of these markets. You know, in the face of that, I think it's important to note we have made some very significant changes in our operating structure over the last year. You know, if you look at our operating expense base over the first nine months of this year versus last year, we've taken out almost $20 million of operating expenses. And that's while we've been adding into for the United States. So on a net basis, it's even more than that. And so, you know, as we move through the pandemic and, you know, the growth rates we're seeing, I think us and a lot of other companies, frankly, got a little bit maybe complacent in terms of efficiencies. And I think we've redoubled our efforts over the last year and really kind of honed the business into where we're operating on a much more efficient basis outside the United States. And it's given us the capacity then to invest more in the United States. But, you know, we now, I think, find ourselves in a much better place from a spending standpoint. With the 5% growth outside the U.S. that you've called out, I mean, it seems like that is taking a pretty conservative approach on how next year plays out. Is that a fair, you know, representation? Oh, absolutely. I think, you know, what we've assumed in that outlook is really no recovery in some of these markets. I think it's also for us internally, it's given us a conservative basis upon which to then budget, right, to think about our spending next year. Because we've given some targets around getting to be EBITDA positive next year and then ultimately cash flow positive the year after, and so having a conservative revenue base then to build our expenses against that, it gives us a high level of confidence we can achieve those targets. Got it. And if things were to get better, I mean, are there certain geographies that turn quicker than others, or is it kind of a slow build typically across them all? Yeah, you know, it's always the hardest thing to know when these markets turn. I think the important thing is they invariably do. You know, what we've seen over the years is that, you know, women's willingness to get these procedures doesn't change all that much, but their ability to pay for them kind of ebbs and flows at different times. You know, you look back at recessionary periods in the past, and markets can be down for a year, maybe two years, but invariably they come back. We saw it in the U.S. in 2008, 2009. We've seen it in other countries around the world. Timing it is always difficult, right? And so I think, again, the guidance that we've given or the outlook we've provided is a better way to put it for next year. We'll give official guidance when we report our fourth quarter. But the initial outlook we've given for next year, we've assumed a very conservative stance around this. And again, we hope to do better. Right. And I mean, the growth rate, when you put it all together, is not that bad at all. No, agreed. Because you look at the U.S., and we've talked about, you know, at least $35 million in the U.S., which again, we also look at that as somewhat conservative given some of the early trends. You know, it still suggests 25% + growth for us next year. Yeah, no, I agree. Maybe moving to Mia, have you continued to see evidence of market expansion with that product? Yeah, Mia is, you know, again, it's another one of these products that is doing better than we had expected in terms of market reception. As we've been commenting, you know, over the last year that we've launched in Europe, more than 40% of the women who are receiving Mia are new to the category. The consideration time, so how long they're thinking about the procedure before they actually get it, is measured in months as opposed to years for traditional breast augmentation. And women are paying a premium, you know, oftentimes 30%-50% more. And so over the last year, you know, we've really been, you know, for us internally, it's been about proving the model, right? It's been a very qualitative year in terms of understanding the metrics, understanding what works and what we need to change. I think we've shown that it is attracting a new group of consumers. And again, with these other metrics around willing to pay more and the shortened consideration time. And as we move into 2025 and beyond, it's about scaling this now, right, and getting more clinics on board and really increasing the access to the technology. But I would tell you over the first year, we've been very happy with what we've seen. And again, it's also important to know it's only been a year, right? That the first procedures in Europe were really at the end of last year. And a lot of accounts in Europe are really less than six months at this point for us. Yeah. And as you think about maybe the timeline of bringing that to the U.S., I mean, obviously that's not the focus right now, the opportunity you have here. But I mean, how are you thinking about that? What does that require? When could that play out? And is it something where right now, because of the opportunity you have here with Motiva, that you're not even prioritizing? I don't want to say not prioritizing it, but I mean, how are you thinking about that? No, it's an important product, and we want to get it to the United States. I mean, when we did our original market research work around the interest in a product like Mia, right, the minimally invasive nature of it, the quicker procedure time, the more natural outcomes, the U.S. was a very large market for that, right? So I think there's a lot of interest in a product like that here. And frankly, you hear it from the surgeons, you know, in the United States when they get exposed to it. The opportunity or what we need to do there is that what we initially had approved in the United States is our round and our Ergonomix families of implants. Mia is based on the Ergonomix2 family, which is a very soft implant. It's very stretchable. It's very ductile. It's really the most natural implant that we've made. When we started the U.S. study a number of years ago, Ergonomix2 didn't exist. We hadn't brought it to market yet, and so now that it is there, we now have to get it approved in the United States. Our working hypothesis is that it will be a PMA supplement, and so think about, you know, 12-18 months to get the approval. But we have yet to really have the deep discussions with the FDA to understand that, but we're still very confident that it'll be a PMA supplement, and it should be about 18 months. Got it. And how's training going with those surgeons? Yeah, so, you know, Mia, we sell it under a different type of model where surgeons, they pay us a fee to be a Mia certified center. And for that payment, they receive training and a number of, you know, things we help them at their clinic and developing their clinic. That training does require some scheduling. It requires them to come to a training facility, to spend a couple of days to learn about Mia. We then send somebody to their facility. And so there is a process by which these centers are trained and onboarded. One of the things we've learned is, you know, trying to find ways to accelerate that and make it easier for clinics to come on board. And so that's one of the things I think you'll see us do in 2025. But again, it hasn't been a deterrent to people's interest in it. We have a lot of clinics that, you know, are in the process of being onboarded and more that we're in negotiations with. And so I think you'll see Mia become a much bigger part of the business over time. Got it. So I probably know the answer to this, and it'll be, it varies, but the timeline from getting signed up to essentially doing procedures. Yeah, it can be anywhere three to six months in some cases. And again, part of it is just, you know, these are busy surgeons, right? If you're getting time to schedule these types of activities, it can be challenging. But so it's something like that typically. Okay. I'll hit on a few financial questions here and open it up to the audience, and we can wrap up relatively soon. So the U.S. market, direct market, you've talked about the ASPs here. If you do the math, obviously it's got a great incremental margin. Can you talk about really the gross margin and EBITDA margin, margin expansion opportunity from here and how you see that playing out over the next couple of years? Yeah, I think it probably is a bit of an underappreciated aspect of the United States in that if you think about the average selling price for us outside the United States versus in the U.S. I mean, the U.S. will be relative to some of our markets, it can be four times higher, and a lot of our direct markets, it can be even twice as high of other direct markets in terms of the realized price for us. The cost of making an implant does not change, and so the gross margin implication as we scale into the United States will be significant. The other side of the equation, though, is that the next couple of quarters in particular, we'll be spending more in the United States ahead of this ramp or in the early parts of this ramp, I should say. And so our EBITDA loss will widen a little bit in the fourth quarter, and then it'll start to, I think, step down again in the first quarter, marching towards that EBITDA profitability we've talked about. But the gross margin in the United States is really going to drive a lot of the profitability over the next couple of years. Right. And with an incremental margin like that, maybe pricing is something obviously that you can justify because of the safety profile and everything of your implant. But I mean, does it give you room where if you wanted to compete on price, not, you know, on parity, but if that was a strategy that competitors try to take? It does give you optionality. It does. You know, I think as you look at our strategy in terms of, you know, product launches, we typically, we have a good, better, best strategy, right? So right now in the U.S., we have round, we have Ergonomix, eventually we'll have Ergonomix2. You know, there is no sacrifice a patient or a surgeon makes if they choose round. All of them share the same surface technology, the same construction, the same safety features. When you move from round to Ergonomix, you get a softer implant. It moves more naturally. Some patients like round. It's a different sort of aesthetic look. And so we generally, you know, price round at a much more competitive point. And then you step up in Ergonomix, you step up again in Ergonomix2. And so we don't like to lose business on price, right? If patients and surgeons are price sensitive, we have an offering for them. And if they want, you know, something higher up the spectrum, we have offerings there as well. And our price differential in the United States, you know, has thus far not been an issue for surgeons. And you see it in the adoption, you know, it's, I think people recognize what we're bringing to market is something different. It's something better. It's opening up new opportunities in terms of the type of procedures these surgeons can do. And so far the price has been justified. Got it. And if we were to just take a longer-term view on the United States, you know, maybe looking at some of the markets internationally, I mean, how do you think about where market share can shake out over the next handful of years as much as, you know, you're willing to share here? Yeah, I mean, aspirationally in every market we enter, we believe we should be the dominant market share player, right? And so there's, it's no different in the United States. And, you know, the U.S., again, given the fact there has been no innovation in this market for literally decades, right? And we have a product which is demonstrably better on pretty much, you know, every metric, right? Clinical data, aesthetic outcomes, you know, surgeon options, right? It's just a better device. You know, following medical devices in this industry that, you know, no company even with that track record takes 100% of the market, but they typically do pretty well, right? And so I think aspirationally we should be the, you know, 50% player or more in the United States over time. Got it. Yeah, that's an attractive opportunity. Any questions from the audience before we wrap up here? All good? All right. Well, thank you. Yeah, thank you, Mason. Appreciate it. Appreciate it.