Establishment Labs Holdings, Inc. Stock

Good morning, and welcome to Establishment Labs Second Quarter 2026 Earnings Call. [Operator Instructions] As a reminder, today's call is being recorded.

I will now turn the call over to Malavika William, VP, Global Head of Corporate Communications and Marketing. Please go ahead.

Thank you, operator, and thank you, everyone, for joining us. With me today is Peter Caldini, our Chief Executive Officer; and Sandra Harris, our Chief Financial Officer. Following our prepared remarks, we'll take your questions.

Before we begin, I would like to remind you that comments made by management during this call will include forward-looking statements within the meaning of federal securities laws. These include statements on Establishment Labs' financial outlook and the company's plans and timing for product development and sales. These forward-looking statements are based on management's current expectations and involve risks and uncertainties. For a discussion of the principal risk factors and uncertainties that may affect our performance or cause actual results to differ materially from these statements, I encourage you to review our most recent annual and quarterly reports on Form 10-K and Form 10-Q, as well as other SEC filings, which are available on our website at establishmentlabs.com.

I'd also like to remind you that our comments may include certain non-GAAP financial measures with respect to our performance, including, but not limited to, sales results, which can be stated on a constant currency basis, or EBITDA, which we disclose on an adjusted EBITDA basis. Reconciliations to comparable GAAP financial measures with non-GAAP measures, if available, may be found in today's press release, which is available on our website.

The content of this conference call contains time-sensitive information accurate only as of the date of this live broadcast, August 6, 2026. Except as required by law, Establishment Labs undertakes no obligation to revise or otherwise update any statement to reflect events or circumstances after the date of this call.

With that, it is my pleasure to turn the call over to Peter.

Good morning and thank you for joining us. Q2 was another strong quarter for Establishment Labs. We delivered revenue of $67.5 million and adjusted EBITDA of $3.7 million, representing revenue growth of 31.7% over the same period last year. The U.S. business once again outperformed, generating revenue of $24.7 million, an increase of over 140% compared to the same quarter last year, and an increase of 26% from Q1. Outside the United States, our business grew steadily at 4.4%, supported by strong execution in our direct markets and steady demand with our distributors.

Our minimally invasive platform continued to emerge as an important growth driver globally, generating $12.1 million in revenue during the quarter. We're off to a good start in Q3, which is traditionally the seasonal low point of our industry. As a result of our first half performance, we are raising our full year revenue guidance to $269 million to $271 million, up from our previous range of $266.5 million and $268.5 million. Minimally invasive is approaching 15% of our global business for the year and is expanding our total addressable market.

We should transition to free cash flow positive during the second half of 2026 and be free cash flow positive for fiscal 2027.

With our recent inclusion in the Russell 2000 Index, we have quite a bit of new interest in our story, and this was a focus of our Q1 call, where we walked through the technological foundation of our business and what makes Establishment Labs different. If you're joining us for the first time, I'd encourage you to read the transcript from that call. It provides a good overview of our product differentiation, strategy, and the long-term opportunity we see ahead. We aren't just looking to take share from others in breast aesthetics and reconstruction. We're looking to meaningfully expand the market. Breast aesthetics has been heavily underinvested for years and we remain the only company bringing meaningful improvements and differentiated technologies to the market. Our goal has never been to be another implant company. Our goal is to be a major contributor to women's health.

We started with Motiva Implant, a product developed through years of investment in science, engineering, and clinical research. It has shown the strongest safety data in the industry, and this has been the foundation for one of the fastest launches in the U.S. breast aesthetics. Our technology platform allows us to do so much more, and we are already seeing how it enables an entirely new category of procedures through the introduction of minimally invasive. Today, that platform consists of 2 procedures, Mia and Preservé. A third procedure called GEM is currently in development and represents a potential breakthrough in gluteal augmentation, offering what could be a safer and more predictable alternative to the Brazilian butt lift.

Mia and Preservé are built on the tissue-preserving principles that Establishment Labs has pioneered and patented. The surgeries are designed to preserve native breast tissue, sensation, and chest muscles. The focus on preservation delivers clear benefits to the patient. Minimal anesthesia with barely noticeable scars and a significantly reduced recovery time compared to traditional breast augmentation. Preservé accommodates a broader range of patient needs, including larger augmentations and augmentation mastopexy procedures while maintaining the same principles of tissue preservation and faster recovery.

Mia, which is currently available outside the U.S., is designed for women seeking a more subtle enhancement, typically 1 to 2 cup size increase. The procedure uses our Ergonomix2 Diamond implant, offering a scarless breast with a small incision made in the underarm. The implant is one of the major differences between Mia and Preservé. It is a patented new shape, breaking a decades-old dichotomy of round and teardrop implants. This shape, which is symmetrical, has more volume in the middle, creating more projection with a smaller volume implant. This shape is the first of its kind, truly innovative, and has many usage opportunities as we expand our efforts in minimally invasive. The softness and lightweight design allow for an augmentation that aims to integrate so well with the body that women forget they have implants.

Also of note, we developed a patented automated injector for Mia, replacing the current manual insertion process used in traditional breast augmentations. Today, implants are generally placed either by hand or through a device known as a funnel. The injector offers a far more seamless process and simplifies what can be one of the more challenging parts of the surgery, and over time could become a new standard in the industry.

As you learn about our technology, it's worth reading the supplement on Preservé that has been accepted and should be published later this year in the Aesthetic Surgery Journal. This is a compendium of peer-reviewed clinical data specifically on breast tissue preservation and the techniques. It focuses on the science, anatomy, and clinical outcomes of breast tissue preservation, and our hope is that it will become foundational learning for plastic surgeons as they adopt Preservé.

Minimally invasive is being very well received by the market, with adoption even at higher price points. Two things are happening here. First, minimally invasive options are bringing new patients into the category that have never previously considered a breast augmentation. Second, patients already considering breast augmentation are opting for this procedure even though it's more expensive. For Establishment Labs in the United States, Preservé commands a premium of more than 2x that a traditional breast augmentation procedure. Not only are we expanding the market, but it appears that women are deciding to get the procedure much faster than they traditionally have. Historically, women could take years between their first thoughts of having breast augmentation and actually getting a surgery. The appeal of minimally invasive is shortening that consideration time. Since launch, we have seen any number of cases where women take months, and in some cases days, from consideration to surgery. We believe we're still in the very early stages of this opportunity. There is significant potential for market expansion, and we expect it to become an increasingly important driver for our growth in the years ahead.

Turning to the quarter, the United States continues to be the primary growth engine for our business, now representing 36.6% of total company revenue, up from 20% a year ago. Another milestone, in Q2, we surpassed 100,000 Motiva implants in the U.S. market in under 21 months since launch. We are still early in our U.S. journey, but crossing 100,000 implants is an important reminder of how quickly the market has embraced our technology and how much opportunity remains ahead of us.

What continues to stand out is the depth of adoption we're seeing. At the end of the quarter, we had surpassed 2,000 accounts in the United States. Many accounts have multiple surgeons using our implants. While we continue to open new accounts, an increasing percentage of our growth is now being driven by utilization within existing accounts.

As surgeons become more familiar with the clinical data, products, differentiators, and patient outcomes, we are seeing adoption strengthen, particularly among early adopters and high volume accounts, where Motiva now represents a significant percentage of their practice. One surgeon who adopted Motiva immediately following FDA approval shared that he has completed approximately 300 Motiva cases in his first year and has now converted nearly his entire augmentation practice. Another surgeon shared that for the first time in his more than 25-year career, patients are actively requesting Motiva by name, and that increased demand is translating directly into higher surgery volumes.

We're also seeing that even when women have a warranty from another company that offers a free replacement, they are paying for Motiva implants themselves. These experience seem to be representative of what we're increasingly hearing across our customer base. Late adopters are also beginning to show interest, particularly as patients' demand for Motiva continues to build.

In a category where patients historically have rarely asked for a specific implant brand, 75% of surgeons now report that patients are asking, and 93% of the time, that brand is Motiva. That level of consumer awareness remains highly unusual in breast aesthetics and continues to be a powerful driver of adoption, making Motiva increasingly difficult for practices to ignore.

Preservé is also emerging as an important growth driver in our U.S. business. We ended the quarter with over 300 surgeons trained and certified on their procedure, which is more than 50% above our original expectations for the year. There is no shortage of surgeon interest, and they now have multiple training pathways available both in the United States and our global innovation hub in Costa Rica. And we continue to see relatively quick adoption following certification. The benefits of Preservé are showing up across both traditional and digital media outlets. In the limited time that Preservé has been on the market, it has been mentioned as the new breast augmentation option, commonly discussed on social media platforms and in the media, including in feature articles from People Magazine and Allure, as well as The Zoe Report and The Washington Post, to name a few.

Surgeons report they are charging between 30% to 50% more for Preservé procedure than for their traditional breast augmentations, confirming that patients value these benefits and are willing to pay for them. It is increasingly early in the launch to see this kind of market expansion and our success is suggestive that we are only in the early innings of something that could fundamentally change the category.

Also interesting, we are hearing from some surgeons that because of the very limited downtime with Preservé, they have booked surgeries throughout the summer, which is unusual because the summer months are traditionally slower for breast augmentations. One of our earliest adopters performed 5 breast augmentations in July and August last year. This year, he's already scheduled for 50 in the same time period.

As we have discussed previously, a major focus of our strategy is expanding and strengthening our direct markets outside the U.S., and we are pleased with the progress we continue to make. Over the past year, we have, not only strengthened leadership across several of our key markets, but also prioritized resources in those markets, and those investments are translating into stronger growth.

Growth was broad-based across many of our regions, driven by strong execution and an increase in the number of accounts. Europe, where we have the most direct markets, delivered 16% growth and was especially strong in Italy, Germany, and the U.K. In Latin America, Argentina continued its positive trajectory from Q1, while Brazil maintained its path of stability, driven predominantly by our minimally invasive platform. Our minimally invasive platform remains an important contributor to growth outside the United States and continues to support adoption across the more than 40 markets worldwide.

In general, demand trends remained stable throughout the quarter, despite continued macroeconomic and geopolitical uncertainty across several regions. Our exposure to the most volatile markets remains limited, and we continue to benefit from a highly diversified global business.

As we look ahead, we continue to advance our innovation pipeline. This includes our reconstruction submission with the FDA, the expansion of our U.S. product matrix through smaller implant sizes, and the continued development of GEM. All of these will help us take market share and expand the market.

With that, I'll turn the call over to Sandra to discuss our financial results in more detail.

Thank you, Peter. The second quarter was another important step forward financially. We continued to deliver strong top line growth while expanding margins and generating positive adjusted EBITDA with improving cash flow. As our U.S. business and minimally invasive platform continue to scale, we're seeing increasing operating leverage across the organization. Total revenue for the second quarter was $67.5 million, an increase of 31.7% compared to the second quarter of 2025. In the United States, revenue was $24.7 million, representing growth of 140.9% compared to the prior year. The U.S. now represents 36.6% of total company revenue and continues to be our fastest-growing region. Growth was driven by continued adoption of Motiva and increasing contribution from our minimally invasive platform.

Geographically, our business outside the United States continues to perform well. OUS revenue was $42.8 million during the quarter, representing growth of 4.4% over the second quarter of 2025. Our minimally invasive platform generated $12.1 million in revenue during the quarter and continues to perform ahead of our original expectations.

Gross profit for the second quarter was $47.7 million, or 70.6% of revenue, compared to 68.8% in the prior year period. Gross margin expansion was primarily driven by the increasing contribution of our higher-margin U.S. and OUS direct markets, favorable product mix, and the continued growth of our minimally invasive platform.

Operating expenses were $52 million for the quarter, including $2.2 million of onetime charges related to restructuring and debt refinancing. Excluding these charges, underlying operating expenses remained well controlled, increasing modestly despite revenue growth of nearly 32%, reflecting continued operating leverage across the business.

Adjusted EBITDA improved by $12.2 million to income of $3.7 million, compared to a loss of $8.5 million in the prior year period.

We ended the quarter with cash and cash equivalents of $71.2 million, a sequential increase of $3.1 million from Q1 and $16.5 million higher than the same quarter last year, and generated positive overall cash flow. This milestone reflects the strong progress we have made improving profitability, expanding margins, and driving greater operating efficiency throughout the organization. Importantly, we have sufficient liquidity to execute our strategy and continue investing in future growth opportunities without the need for future equity raises.

Given our strong first half performance and continued momentum across the business, we are increasing our full year revenue guidance to between $269 million and $271 million. We expect the U.S. business to be the primary driver of growth, while our OUS business remains healthy and diversified. As we look to the third quarter, I'd like to remind investors it is historically the softest quarter in the industry, reflecting the summer vacation period. We expect the U.S. business to remain strong and our OUS business should reflect the normal seasonal pattern.

As always, we expect our strongest quarter to be the fourth. We remain very encouraged by the performance of the business, the continued momentum in the United States, the growing contribution of our minimally invasive platform, and the increasing profitability profile of Establishment Labs.

Now, I'll turn the call back over to Peter.

Thank you, Sandra. As you've heard today, we continue to execute well across the business. The U.S. remains a significant growth driver. Our OUS markets continue to perform well. Our minimally invasive platform is gaining momentum globally, and we have a clear path to being free cash flow positive. At the same time, we continue to advance a pipeline that should support growth for many years to come. While we are proud of what we've accomplished so far, we believe the opportunity ahead remains substantially larger than what we've achieved to date.

Operator, we're now ready to take questions.

[Operator Instructions] Your first question comes from the line of Josh Jennings from TD Cowen.

Great to see another strong quarter, especially the U.S. momentum. Appreciate your comments on Mia during the call so far. Our checks have suggested that there's some optimism in U.S. plastic surgeons that Mia ultimately could produce an entire new category in the aesthetic space where you could transition breast augmentation from a surgery to an injectable procedure. And is there any plans to kind of drive that notion and just that segmentation here in the international markets where you've launched and then ultimately in the U.S.? And how does that all play out?

Yes. Thank you, Josh. Listen, I think that what we've always highlighted around the minimally invasive platform, this is truly an innovation in a category that hasn't seen innovation. And Mia, as you highlighted, is just outside the U.S. We've had good traction. It's also a key driver for the development of Preservé. So part of this entire minimally invasive platform, I think is a significant growth driver for us. It brings in a number of new patients to the category. We've seen that through market research in the U.S., it's about 15% with Preservé. Outside the U.S., similar type of numbers. It does address a number of the barriers that are preventing women from doing a breast augmentation. When you talk about minimal anesthesia, you talk about also those smaller scars and quicker recovery. So it'll continue to be a key driver for us. And we're just in really the early stages of that development. And we're seeing that impact in the U.S. and also outside the U.S.

And I know I'm focused on the pipeline here with my questions, but you referenced GEM on the call so far. It seems like there's a potential for, we may be getting too aggressive with our assumptions, but a potential for initial U.S. kind of commercial -- OUS, excuse me, commercial launch maybe next year. Any more details you can provide on where that development program stands and any kind of regulatory or commercial milestones we should have on our catalyst calendar?

Yes. So, Josh, regarding GEM, we see this as a tremendous opportunity, really leveraging a lot of the technology from the minimally invasive platform in really providing a safer alternative, also with more predictable results to the traditional Brazilian butt lift. So where we are in that process is, we're doing a clinical study in Costa Rica. We expect next year in the back half to do an early experience in Latin America. And right now we're really working through what that regulatory pathway is going to be for the U.S. as well as OUS, primarily in Europe. But we're very pleased with the progress we've made so far. I mean, it's a very differentiated technology, and we see this as very much an untapped market.

But in terms of timing for, let's say, the U.S., we have so many things that we're going to be driving growth over the next couple of years. We don't see that really as a contributor in the U.S. until 2028 and beyond. But we're still working through what that regulatory pathway is going to be.

Your next question comes from the line of Sam Eiber from U.S. Bancorp.

Congrats on the nice quarter. I want to come back to Preservé in the U.S., 300 surgeons now certified. Curious what you're hearing from the field in terms of utilization and adoption, their own plans to expand Preservé within their practice, and generally thoughts around the procedure and what it can mean for the U.S. business over the back half of the year.

Yes. Thanks, Sam. I mean, it's pretty clear we're off to a great start with Preservé. There's significant demand. I think our original target was around 200 surgeons. We quickly surpassed that. We're really expanding our capacity in terms of training. There's no shortage of surgeons that are interested. What we're finding is that, as soon as they're certified, it's very quick adoption in terms of the initial ordering, and then it's a process of working through their schedules and getting the right patients. We fully expect that this is going to be continually a key driver for our growth in the back half of this year. We're targeting to train approximately 500 surgeons for the full year 2026. And this is really driven by tremendous demand in the marketplace, and it is addressing a significant barrier that patients have with doing a breast augmentation, and that's really been playing out in what we're seeing in the marketplace.

Okay. Really helpful. Maybe if I could just squeeze in a quick follow-up. The global minimally invasive revenue for the quarter, $12 million, certainly passed our expectations. As I think about the prior $35 million guidance, it seems like you're on pace to achieve well beyond that. I guess, any updated thoughts on how we should be thinking about that number?

Yes, Sam, I think we said over $35 million, and what we've said recently is that, we're going to be approaching, for the full year, about 15% of our revenue. So I think that depending upon how you look at our guidance, that gives you the guide for minimally invasive going forward.

Your next question comes from the line of Mason Carrico from Stephens.

Could you give a sense of Motiva mix among Preservé-trained surgeons compared to that of an untrained one? Have you seen Preservé certification lift overall Motiva mix or share at that account? And I guess, longer term, what percentage of your U.S. volumes do you think could ultimately be Preservé?

Yes. We are seeing in the accounts, I mean, there's such strong interest in Preservé. It's truly a unique innovation in the marketplace that's really been starving for innovation. So we're seeing strong interest and a number of surgeons are really, once they get trained and accustomed to using Preservé, a lot of them see this as really the future of the industry, and it will continue to be a bigger part of the practice. It generates a significant revenue opportunity for them. So we see that over time, that will continue to be a bigger part of that market.

In terms of the split, I don't -- Sandra?

Yes. I mean, in terms of the split, I don't know that we've really talked about the split between the U.S. and the OUS, but it's going to be a very important part of our ability to expand the market and to continue to take market share in the U.S.

Your next question comes from the line of Caitlin Roberts from Canaccord Genuity.

Congrats on a great quarter. Would love to touch on recon. Have you had any convos with the FDA on the recon indication and updated expectations for this approval time line? And how many hospitals are you now in the Flora?

Yes. Thanks, Caitlin. Obviously, recon is a tremendous opportunity for us. It doubles the TAM for us in the U.S., and we fully expect to have the same level of success in recon in the U.S. that we've experienced in augmentation.

So in terms of the feedback, we have heard back from the FDA. We're in the process of responding to what we consider some routine questions. What I think is very positive, they now started the BIMO audits of our clinical study sites, which I think is a normal part of the process, and I think it's a good indication that things are progressing well.

In terms of the actual approval timing, I mean, it's really up to the FDA. But what we're seeing, everything is positive, moving in the right direction. And just to remind everybody, we don't really expect from a planning standpoint to achieve material revenue in recon until 2027.

Your next question comes from the line of Joanne Wuensch from Citi.

This is Jane-Marie Lai on for Joanne from Citi. At this half-year mark, could you provide more color on your expectations for the second half of the year? And I know it's a bit early, but for 2027, how should we think about that? And do you have any kind of color on that as well?

Yes. So I'm not sure I've fully heard the question. My understanding is what's our expectation in terms of the back half of the year. Listen, I think we're going to continue to see the strong momentum that we've experienced in the first half, especially with the U.S., but also in terms of how we're driving growth in our direct markets. We expect that momentum to continue in the back half of the year. And I think there's significant continued growth opportunities with our platforms and the different initiatives that we're driving. We haven't really set any guidance as it relates to 2027, but I'll pass that over to Sandra.

Yes, just as it relates to this year, I'll just remind you of our seasonality, and we do anticipate that our fourth quarter is always the strongest quarter of the year, with the third quarter being impacted by some seasonal impact around the summer and vacation periods in both our OUS business and our U.S. business. What we did is, we have raised our guidance to $269 million to $271 million.

And then in regards to 2027, the only information we've provided to date is that, we do expect that revenue next year would be around the 25% growth mark.

Your next question comes from the line of Anthony Petrone from Mizuho Financial Group.

Congrats on the strong print here. Maybe one on Preservé competitive dynamics and then pricing. Just on Preservé, when you think about site adoption in the U.S. specifically, one of the med tech phenomenons, for instance, with da Vinci Surgical, you sort of have da Vinci in your practice in the early days, and it represents a competitive advantage for that site. That site then gains share from its competitors. So to what extent do you think Preservé is going to allow surgeon sites to have competitive advantages versus its competitors? When do you think that tipping point actually happens?

And then just on unit economics, can you remind [Audio Gap]

All right. Thanks, Anthony. In terms of Preservé, as we highlighted, we're really in the early innings in the U.S., but the feedback has been incredibly positive from the surgeons. We continually get approached by surgeons, and we expect that to continue to grow. As I mentioned previously, we're building out or expanding our capacity to do the training. So for us, I think that's going to be the surgeons that are using Preservé, it provides them a significant competitive advantage in the market, and I think that's where such a strong interest is. I mean, we've seen from market research that 15% of women who have done Preservé were not initially considering doing a breast augmentation until they heard about Preservé. So it really has the potential to be a category driver and bring additional patients to the surgeon. So we see that as a competitive advantage, and that's probably why we have such significant demand from different surgeons.

In terms of the recon, we highlighted we're making good progress from a regulatory standpoint. This clearly is a significant increase in terms of the ASP in the recon segment. It also really doubles our total addressable market in the U.S. So we're very pleased with the progress we're making there. I think we've already laid a decent foundation with the Flora, just getting our foot in the door in a number of facilities, but we still have to go through that process.

Your next question comes from the line of Mike Matson from Needham & Company.

So I heard the growth is kind of 4-ish percent outside the U.S., but just curious if you're seeing or saw any sort of impact from the Iran war in either the Middle East or the broader international business in the quarter.

Yes. So, thanks, Mike. I mean, we've had, I think, very solid growth outside the U.S., and a lot of that's been driven by our direct markets, in particular in Europe. We've achieved 16% growth this quarter versus the same year -- the same quarter last year, so very pleased with that. And that's very important for us because we prioritize those markets. These are our markets where we have better economics. We've made a number of leadership changes. We're also increasing the resources, and it's really reflected in terms of our performance.

What we're trying to do is deemphasize our dependency on the distributors, and I think that's really been -- we're really establishing that, and I think we've been very effective in doing it.

Specifically, I would say across most of our distributor markets, I think demand has been steady. But the one outlier is what you highlighted is the Middle East, obviously, with the conflict there. We have had orders, but it's at a much lower level than what we've experienced in the past. And we don't expect that to change for the remainder of the year. But this is in terms of the spillover in other markets, we haven't really seen that, but we're going to continue to monitor that very closely and course correct where necessary.

And Mike, just as a reminder, Middle East is less than 5% of our revenue.

Your next question comes from the line of Allen Gong from JPMorgan.

I guess just on the cost front, when we look at your operating spend for the quarter, excluding the refinancing costs, came in better than expected. But when we look forward, there's clearly a lot to invest into between continued launch of the minimally invasive platform and upcoming reconstruction, not to mention GEM. So how should we think about the trajectory of SG&A and R&D spend in the balance of the year?

Yes. Thanks, Allen, for the question. And as you noted, we are making progress leveraging our operating expenses. As you noted, we had some onetime costs in the quarter that made our overall operating expenses around $52 million, but when you adjust for that, we're seeing that basically we have leveraged our operating expense in relation to our sales growth. So single-digit growth in operating expenses with strong double-digit growth in revenue.

As we look out, we have had a very healthy investment in our R&D efforts around our innovation pipeline, and I think we've been investing at the right rate to bring that innovation. So to date, we're not anticipating any major increases to what we've previously seen. We think we're pacing our innovation pipeline appropriately, and we continue to look for areas of opportunity to leverage our expenses as we grow the business across the organization.

Your next question comes from the line of Matthew Taylor from Jefferies.

I wanted to ask a follow-up on recon, and maybe I'll weave that into a '27 question. So, I guess my question is, hypothetically, if you got recon approval on January 1, I'm just interested in how quickly that would start to contribute and how quickly you can launch it? And when you talked about 25% growth-ish next year, does that include a lot of recon contribution, or would you grow 25% without it?

Yes. In regard to recon, I think what we've said in the past is that, we don't anticipate we would grow as rapidly as we have with our launch of our minimally invasive platform. It does take a longer period of time as we work with the hospitals. And as far as what's in our guidance for this year, I think we've said that we don't have any anticipation for recon this year. And as we work toward 2027, we'll provide more color on that based upon what we know from the FDA timing.

There are no further questions at this time. I will now turn the call over to Mr. Peter Caldini for closing comments.

Thank you, operator, and thank you everybody for joining the call today. Really appreciate the time. And as you can see, we're making great progress in terms of the growth with Establishment Labs. Really applying a lot of financial discipline, but at the same time making sure we deliver in terms of the revenue expectations. We have a tremendous portfolio, tremendous opportunity of innovation, and we continue to capitalize on that in terms of great execution.

So once again, thanks everybody for joining the call today. Look forward to catching up in the follow-up calls as well as upcoming conferences. Thank you.

Ladies and gentlemen, this concludes today's conference call. Thank you for your participation. You may now disconnect.

Good morning. Welcome to Establishment Labs First Quarter 2026 Earnings Call. [Operator Instructions] As a reminder, today's call is being recorded.

I will now turn the call over to Malavika William, Global Head of Corporate Communications and Marketing. Please go ahead.

Thank you, operator, and thank you, everyone, for joining us. With me today is Peter Caldini, our Chief Executive Officer; and Sandra Harris, our Chief Financial Officer. Following our prepared remarks, we'll take your questions.

Before we begin, I would like to remind you that comments made by management during this call will include forward-looking statements within the meaning of federal securities law. These include statements of Establishment Labs' financial outlook and the company's plans and timing for product development and sales. These forward-looking statements are based on management's current expectations and involve risks and uncertainties.

For a discussion of the principal risk factors and uncertainties that may affect our performance or cause actual results to differ materially from these statements, I encourage you to review our most recent annual and quarterly reports on Form 10-K and Form 10-Q as well as other SEC filings, which are available on our website at establishmentlabs.com.

I'd also like to remind you that our comments may include certain non-GAAP financial measures with respect to our performance, including, but not limited to, sales results, which can be stated on a constant currency basis or EBITDA, which we disclose on an adjusted EBITDA basis. Reconciliations to comparable GAAP financial measures for non-GAAP measures, if available, may be found in today's press release, which is available on our website.

The content of this conference call contains time-sensitive information accurate only as of the date of this live broadcast, May 6, 2026. Except as required by law, Establishment Labs undertakes no obligation to revise or otherwise update any statement to reflect events or circumstances after the date of this call.

With that, it is my pleasure to turn the call over to Peter.

Good morning, and thank you for joining us. Q1 2026 was a strong start to the year with $59.9 million in revenue and adjusted EBITDA of $1.2 million, representing revenue growth of 45% over Q1 2025. The U.S. business continued to outperform with $19.6 million of revenue, a growth of 216% over Q1 2025 and quarter-over-quarter growth of 13.3%. It's worth noting that Q1 is a seasonally light quarter for breast augmentation and reconstruction, so to grow quarter-over-quarter is a testament to the strength and acceleration of our U.S. launch.

Outside the U.S., we delivered 15% growth, driven by strong execution on both our direct and distributor markets. Our minimally invasive platform is showing immense promise as well, generating $9.1 million in revenue in Q1. At the same time, we had our third quarter of positive adjusted EBITDA. Our gross margin improved by 350 basis points in Q1 2026 to 70.7%, up from 67.2% in Q1 2025.

We refinanced our credit facility and expect to reach cash flow positive in the second half of the year. Our increasing profitability is demonstrating the operational leverage in our business as well as our ability to generate meaningful earnings per share in the coming years. We continue to be conservative as we forecast our business due to the geopolitical landscape as well as our hyper focus on achieving and scaling a cash flowing positive business.

As such, we are raising our guidance to $266.5 million to $268.5 million, up from a previous range of $264 million to $266 million. Our confidence comes from the strong start we are having in Q2, we are setting new weekly highs in our U.S. order counts. We expect our growth to continue throughout 2027 as well.

As we've mentioned on prior calls, there is a good likelihood we may be included in several indices, beginning with the Russell 2000. As we're seeing increased interest from firms that benchmark to these indices, we thought it would be helpful to provide an overview for those being introduced to our company for the first time. The robust growth we reported this quarter is a reflection of our work since 2011.

Establishment Labs is a women's health company focused on transforming breast aesthetics and reconstruction through innovation. Since the moratorium on breast implants in the U.S. was imposed in 1992, this category has seen very little meaningful innovation. And as a result, patient behavior, surgeon adoption and overall market growth has remained relatively static.

Establishment Labs was founded on the belief that a deep investment in science could fundamentally improve existing technology and provide better options for women. From the beginning, we reexamined every aspect of the breast implant from surface technology to manufacturing, leveraging advances in material science, biomedical engineering and device design. This work is reflected in a robust intellectual property portfolio with more than 200 patents issued and pending worldwide.

In 2015, we brought on Dr. Robert Langer to lead our Scientific Advisory Board. Bob Langer is one of the most accomplished scientists of the 21st century, and his contributions are behind the founding of several prominent companies. His work at MIT continues to impact science at the highest levels. Our partnership resulted in a seminal paper for plastic surgery. Published in Nature Biomedical Engineering in 2021, this paper focused on breast implant surface technologies and highlighted that the 4-micron surface, which was intentionally designed to enhance biocompatibility, consistently demonstrated low inflammation. These results explain how Motiva implants outperformed the category.

The U.S. FDA clinical trial matched both our research findings and clinical data from around the world and is quite frankly, game-changing. All these data points show device-related complication rates at new industry lows, including capsular contracture rates of less than 1%. To put this in perspective, the FDA trials for competitive products have device-related complications rates that are upward to 20%. And in some cases, the complication rates far exceed 20%.

Perhaps most interesting is our extended global warranty data with over 49,000 warranties sold and only 377 claims submitted, the resulting complication rate is less than 1%. We publish this data annually on our post-market surveillance report and are the only company in the industry that publicly shares this information, which you can find readily available on our company website.

Fear of complications are one of the top barriers for patients when considering a breast augmentation. Having a product that has an outstanding safety profile helps to diminish that concern and provides extra peace of mind for both patients and surgeons. Less complications leads to happy patients and more referrals, which is the lifeblood for any plastic surgery practice.

The significant technology moat that has been established is enhanced by our R&D pipeline of continuous innovation. Not only do we believe that we can take a substantial majority of breast implant market in time, we also believe we can significantly expand the market from where it is today. That is best evidenced by the launch of our Motiva minimally invasive platform.

We have 2 minimally invasive procedures in market right now, Mia and Preserve. A third is currently in development called GEM and is a revolutionary advancement for gluteal augmentation that should offer a safer, more predictable alternative to the Brazilian Butt Lift. Both Mia and Preserve are available outside the United States with a presence in more than 45 markets globally. While Mia is not yet available in the United States, we recently introduced Preserve to the U.S. market. Both are built on tissue-preserving practices, which Establishment Labs has pioneered, and they allow for the use of minimal anesthesia while preserving the patient's native breast tissue, nipple sensation and chest muscles.

Mia features the Motiva Ergonomix2 Diamond shaped implant, which has a unique shape that allows for greater projection than a conventional round implant as the shape creates more projection with less volume. It also includes a proprietary shell, which allows insertion through the smallest incision possible within the Motiva portfolio. These characteristics make for a true scarless breast augmentation done by a small incision in the underarm. This procedure is meant for patients looking for a subtle enhancement with 1 to 2 cup size increase.

Preserve can feature either the Motiva Ergonomix1 or 2 implants and accommodates both primary breast augmentation and primary breast augmentation mastopexy, offering patients smaller scars tucked under the breast crease and allows for larger sizes to be used. The launch of minimally invasive techniques into any specialty almost always dramatically increases the market.

For example, there were approximately 95,000 total knee arthroplasty procedures in 1991. Between 2000 and 2005, minimally invasive knee procedures became the standard. And by 2010, there were approximately 250,000 procedures annually. In 2025 alone, this number rose to approximately 1.3 million, an increase of close to 14x. This kind of growth exists in other major procedure types as well, such as LASIK eye surgery and fat reduction.

In the United States, our minimally invasive technologies command a premium over 2x higher than traditional breast augmentation. And if our overseas growth is any indication, we can expect that minimally invasive will create significant market expansion and be a meaningful driver of growth. The value proposition for patients is well defined, smaller scars, minimal anesthesia, preservation of tissue and sensation and a faster recovery, combined with the safety and performance benefits of Motiva.

Our initial 3-year study on Mia was published in the Aesthetic Surgery Journal in October 2025 and showed no device-related complications. Like our FDA trial data, this is game-changing. It's clear that this procedure is fundamentally different from what has come before. Many women no longer view this as the traditional breast augmentation they once knew, but rather as a more accessible almost lunchtime procedure where they can return to normal social activities within hours. Women that have never considered breast augmentation before are now getting the procedure, and we are expanding the market.

RealSelf, a popular online platform for aesthetic patients, published last week that breast augmentation page views were up 45% from Q4 and that breast implant revision page views were up 89%, indicating that patients' interest in the category is surging.

Not only do our patients benefit, our minimal invasive platform also has the potential to increase surgeon productivity, allowing surgeons to run 2 operating rooms, one where the patient is being prepped or the room is being cleaned and the other where the surgeon is operating. We had one plastic surgeon that started surgery at 6:00 a.m. and by 10:30 a.m., he had completed 10 minimal invasive surgeries. Scheduling a minimally invasive procedure day like this can generate more than 2x additional revenue for a practice.

The introduction of our minimal invasive platform enhances the Motiva portfolio, creating a clear, good, better, best framework. This allows the plastic surgeon to address a broader range of patient needs across the aesthetics outcomes, lifestyle consideration and price points. This portfolio approach is not just about product breadth, it enables us to expand the category, increase procedure volumes and drive higher value per procedure while giving surgeons the flexibility to tailor their solutions to each patient. Patients are now engaging with surgeons very differently than before. In a category where it was historically very unusual for patients to ask about implant brands, 78% of surgeons now report being asked for a brand by name. And in those cases, 93% of the time, that brand is Motiva.

And now just 18 months into our U.S. launch, we are seeing the next step. Patients are not only asking for Motiva, they are actively seeking out surgeons who are trained in minimally invasive procedures. We expect to see a similar dynamic as we enter breast reconstruction in the United States, an opportunity that is equal in size to the breast augmentation market. We submitted Motiva implants to the U.S. FDA for approval in primary and revision breast reconstruction in December 2025 and are currently progressing through the review process. I hope that reintroduction to our business was helpful and that the context explains our success to date.

The U.S. remains the most important driver for our growth. Motiva continues to be one of the fastest launches in the history of breast aesthetics, and we continue to expand our footprint, recently surpassing 1,700 accounts. We are seeing increased adoption from higher-volume surgeons who have moved beyond initial evaluation and are now fully committed to Motiva. This is reflected in our order growth, where we have experienced 30% increase in average orders since the end of Q4. We officially launched our minimally invasive platform in the United States in March, and the response has been exceptional.

While we initially trained surgeons on Preserve in our campus in Costa Rica, early demand was so strong, we began training in the United States as well. This has allowed us to train surgeons at a much faster rate, and we have now certified more than 260 surgeons in the U.S. For context, our goal was to train 200 surgeons by the end of 2026, and we soared past that number by the end of the first quarter. Those trained have shown a strong intent to purchase, and we have seen relatively quick adoption with the first procedures being performed shortly after training.

A surgeon in the Northeast recently shared that he began offering Preserve after being trained and promoted the procedure on social media. He now has 50 Preserve cases scheduled in Q2 at a 30% premium to his traditional breast augmentation price. Another surgeon in Southern California was thrilled that Preserve has completely changed her practice and that she is consistently seeing patients that had previously deferred surgery due to the concerns around anesthesia and recovery.

When you remove historic barriers, you bring new patients into the market. A recent Preserve patient who is a Pilates instructor got her procedure done on a Saturday, went to dinner with friends that night and was back teaching Pilates on Monday. This kind of recovery is traditionally unheard of. And for the first time, patients are truly returning to normal activity with a minimal downtime.

In a recent survey conducted with 94 Preserve patients, 3 months post-surgery, 98% stated that they experienced minimal disruption to their daily lives with 95% satisfied or extremely satisfied with the results. In addition, 15% of patients said they were new to the category and had not considered breast augmentation until they learned about Preserve. 84% of the Preserve patient survey said they were willing to pay a premium for the benefits of the procedure with 99% saying that they would choose this procedure again.

Outside the United States, our business continues to perform well. We delivered approximately 15% growth with strong performance across our direct markets, which continues to be a major focus area for us. Our minimally invasive platform continues to be a key driver for growth globally. It is interesting that surgeons generally view the 2 procedures as complements to each other and all Mia accounts are offering Preserve, showcasing the value of a minimally invasive portfolio approach that provides patients options to meet their aesthetic goals.

Preserve continues to attract surgeons to the overall Motiva portfolio. In our OUS markets, we are seeing strong growth across European direct markets, including the U.K., Germany, Nordics and our newly acquired Benelux affiliate. Continued stabilization in Latin America with solid performance in Argentina due to the adoption of the Motiva minimally invasive platform as well as steady demand across all our distributor markets. Our exposure to the Middle East remains less than 5% of total revenue, limiting risk from regional volatility.

In our U.S. and OUS markets, we expect growth to continue to accelerate into 2027. We also expect to continue the innovation pipeline by expansion in breast reconstruction in the United States, which effectively doubles our addressable market, gaining CE Mark for Zen temperature, marking our entrance into biosensing capabilities, introducing smaller sizes to our U.S. product matrix and thus expanding our reach within existing accounts, continue to develop our pipeline, including GEM, our glue augmentation solution.

We also plan to submit for Health Canada medical device license for expansion in the Canadian market. As part of our overall strategy, we are taking steps to secure our future growth. This includes our signed agreement with Oaktree that refinances our debt and enhances our financial flexibility. And finally, we are in active conversations with NuSil, our silicone supplier as we both look to establish a long-term agreement. We've had strong working relationship with NuSil for the last 15 years, and our ongoing conversations are very focused on what we can accomplish together as partners.

I will now turn the call over to Sandra.

Thank you, Peter. We delivered an exceptional start to 2026 with nearly 45% revenue growth, gross margin expansion over 70% and our third consecutive quarter of positive adjusted EBITDA, demonstrating the strength, scalability and operating leverage of our business.

Total revenue for the first quarter was $59.9 million, an increase of 44.7% from Q1 2025. Starting with our geographic performance. Our business outside the United States remains the largest contributor to revenue and continues to perform well. In the first quarter, OUS revenue grew approximately 15% over Q1 2025, driven by strength across our distributor and direct markets with direct markets delivering double-digit growth. Our exposure to the Middle East remains limited at less than 5% of total annual revenue.

In the United States, we see strong momentum early in our expansion. U.S. revenue reached $19.6 million in the quarter and now represents 32.7% of total revenue, up from 26.8% in Q4 2025 and higher than the 15% from Q1 of 2025. This growth reflects both continued adoption of Motiva and the March launch of our minimally invasive platform, which is contributing to higher realized price points.

Our gross profit for the first quarter was $42.3 million or 70.7% of revenue, a 350 basis point increase compared to 67.2% of revenue in Q1 of 2025. This expansion was primarily driven by the increasing contribution of our higher-margin U.S. business, along with the growing impact of our minimally invasive platform, which carries higher average selling prices and margins.

SG&A expenses increased $3.9 million to $43.6 million compared to $39.7 million in the first quarter of 2025. The increase was primarily driven by variable costs associated with higher sales, including freight as well as the impact of foreign exchange with continued investment in the U.S. business. Excluding a one-time item, adjusted SG&A was $41 million or 68.4% of revenue, representing approximately 50 basis points of leverage versus the prior year as we began to scale the business.

R&D expenses for the first quarter were $5.2 million, consistent with prior quarters. Adjusted EBITDA was positive $1.2 million in the first quarter compared to a loss of $12.1 million in the first quarter of last year. This is our third consecutive quarter of positive adjusted EBITDA.

During the quarter, cash decreased $7.5 million to $68.1 million from December 31, 2025. The decrease was primarily driven by investments in the U.S. market. We recently completed a refinancing of our debt, which enhances our financial flexibility, improves our liquidity profile and introduces PIK interest that supports our path to cash flow generation. We have enough cash on hand to reach cash flow positive and have no needs or plans to do any type of equity financing.

Following our strong performance in the first quarter, we are increasing our full year revenue guidance to $266.5 million to $268.5 million, up from our prior range of $264 million to $266 million. This represents growth of approximately 26% to 27% over 2025. We expect our OUS business to grow in the single digits, while the U.S. is expected to exceed 30% of total revenue for the year, up from approximately 22% last year.

At $9.1 million in the quarter, our minimally invasive business is above expectations, and we now expect to exceed $35 million in 2026, up from the $30 million we guided to in February. We expect gross margins in the range of 71.2% to 72.2% for the full year. Operating expenses are expected to remain between $195 million and $200 million, with some variability in quarterly spending based on timing. We also expect to be adjusted EBITDA positive in each quarter of 2026.

As it relates to cash flow, we are on track to achieve cash flow positive in the second half of the year, driven by improved profitability and greater working capital efficiency. In the near term, we expect higher cash usage in the second quarter compared to the first quarter, primarily due to the final $4.7 million payment related to the Benelux acquisition, the normal timing of the short-term incentive payouts and continued investment to support the U.S. commercial expansion, partially offset by $6 million of proceeds from our recent debt refinancing.

We expect cash performance to improve meaningfully in the third and fourth quarters, supported by increased profitability and the benefit of PIK interest of more than $5 million per quarter. Historically, Q2 and Q4 are the strongest quarters in the industry with Q4 being the largest, while Q3 is typically softer due to summer seasonality. Operating expenses will be elevated in Q2 as we continue to invest in the U.S. business. Despite this, we expect Q2 EBITDA to be approximately double that of Q1, reflecting the underlying operating leverage in the business.

With respect to index inclusion, April 30th marked the Russell reconstitution rank date. And based on our current market capitalization, we believe we are well positioned to qualify for inclusion in the Russell indices with final membership to be confirmed in the coming months.

With that, I'll turn the call back to Peter.

Thank you, Sandra. As you think about our business, we hope we get a chance to interact with you at one of our many events we attend throughout the year. If you're interested in learning more, we selectively invite investors to visit us in Costa Rica at our innovation campus alongside our U.S. plastic surgeon delegations. Investors have found this trip very useful in validating our business and the overall opportunity.

We are also hosting a small dinner in Boston around The Aesthetic MEET Plastic Surgery Conference from May 14 to May 17. If you're interested in either of these, please reach out as space is limited. I appreciate you taking the time to listen, and I hope to see you on the next call soon.

Operator, we're ready to take questions.

[Operator Instructions] Our first question comes from Anthony Petrone of Mizuho Group.

Congratulations, Pete, Sandra and to the team on a strong start to the year here. Maybe the U.S. momentum here, it looks like an inflection and you have really almost 2 simultaneous launches, if you will, ongoing. It's the U.S. Motiva platform in and of itself. There's still a push into new accounts. And then, of course, we have the Preserve launch. So maybe how much was just new accounts bringing in Motiva as a platform versus the Preserve go-live counts? I mean, by our estimate, you're probably approaching somewhere between 75 and 100 go-live Preserve accounts. I'll start there, and I'll have a quick follow-up.

Yes. Thanks, Anthony. As you highlighted, I mean, the progress in the U.S. has been tremendous. I mean it's exceeded all our expectations. And you see that with all the different metrics that we look at. I mean we've increased the number of accounts. We continue to grow the base Motiva business. And a lot of that is driven and it shouldn't be a surprise. I mean we've come to the market with what we believe to be the best implants from a performance as well as a safety standpoint, and we couple that with a best-in-class organization. So that's really helping to drive that growth. And a lot of that currently is still based off of expanding the Motiva-based Motiva business and getting into more accounts, but we're also driving utilization in the accounts that we're in.

And clearly, Preserve is a significant -- will be a significant driver for us in the future. I mean, it's not a surprise as well. I mean, there's very clear patient benefits with minimal anesthesia, with smaller scars, quicker recovery. And I think it's creating a lot of interest and excitement from a patient as well as a surgeon standpoint. So we're seeing good growth opportunities just on our base as well as on the Preserve launch.

The next question comes from Josh Jennings of TD Cowen.

Great to see the strong start to the year. I wanted to ask about the minimally invasive platform, follow-up to Anthony's question and clearly gaining more and more traction. I'd love to just hear you build out more, Peter, on just how Preserve is not cannibalizing the Motiva business or Motiva cases, but it's actually incremental to kind of the traditional augmentation patient. And then maybe do the same for Preserve and Mia, and just help us understand how they may be complementary and how the Preserve launch internationally may be even boosting Mia traction as well.

And if you could tie it all into just -- it sounds like you're optimistic that the breast implant market globally, especially in the United States can actually see stronger growth here in the coming quarters, years and then how this all ties in. Sorry for the multilayer question, but I appreciate you taking it.

Yes. Thanks, Josh. As you highlighted, the minimally invasive platform, we're seeing a lot of very strong growth. When you look at our OUS markets where we have both Mia and Preserve, what we've seen, and we've been very pleased to see this is they operate very complementary. So in all the accounts that we currently have Mia, which is close to 150 accounts, we have Preserve. There's clear distinction between the 2 where Mia is much more of in the premium segment, smaller scars to no scar, it's under the armpit. But it's somewhat restrictive in terms of the number of -- or the type of patients and the type of surgeons that would use that.

While Preserve is much more day-to-day and it's a premium versus our base, but it's less lower priced than Mia. So they work very complementary. What we've been able to see in a lot of markets in OUS is just with the minimally invasive rollout with Preserve as well as Mia. We've been able to expand our account base in a number of markets that's really helped to drive that.

And then to answer your last question, and we're seeing this with some of the market research that in the U.S. with Preserve, 15% of women that have used the procedure were not currently considering breast augmentation. So we believe that the minimally invasive, both Mia and Preserve has a real opportunity to drive category growth. And I think there is just increasing a lot more interest in the area of transparency with -- not only with the Preserve and Mia, but as well as just more openness and interest in breast augmentation, and we feel that we're a big part of that.

The next question comes from Sam Eiber of BTIG.

Maybe I can stay on Preserve for a moment. Peter, would love your thoughts on if you think Preserve can eventually become standard of care over traditional breast augmentation at least here in the U.S. And maybe you can help explain why Preserve is something that beyond the tools is something that can only be done with Motiva, whether it's the implant surface, whether it's the low complication rates. Would love if you can explain that in a little bit more detail.

Yes. I mean, I think in terms of the minimally invasive and Preserve, not only in the U.S., but I think globally, it really makes sense. If you look at our different types of procedures, surgical procedures, everything is minimally invasive. And I think bringing that technology and that capability, I think it's -- I think patients, that's what they're looking for. I mean it's very clear what the benefits are for patients, smaller scars, quicker recovery, minimal anesthesia, which is very important for a number of women. So it really has the opportunity to be a significant growth driver, but it's the standard of care, I think, in the industry.

And I think in some respects, because of the lack of innovation we've seen in the U.S. prior to our entry, I think a lot of the category is behind. So we do believe that, that's going to be more standardized in the industry. And I think it's really our innovation with the unique implants that we have is very specific and beneficial for this type of procedure. And we'll continue to look at and continue to drive innovation that really shapes the category. And I think this is just the starting point for us.

The next question comes from Mason Carrico of Stephens.

I assume that most, if not all, Preserve users were already Motiva users. But I was curious to hear if that launch is actually to increased conversation or maybe even conversion of accounts that previously hadn't adopted Motiva. Maybe just a simpler question is, do you think that launch could actually accelerate the onboarding of new accounts moving forward?

Yes. So Mason, I mean, we're pretty early in the launch, but what we've seen outside the U.S. is that the minimally invasive, specifically Preserve, has brought in a number of new accounts for us in our direct markets in Western Europe. So it has had that benefit, bringing new technology, bringing a new procedure, I think, has really resulted in our ability to drive account growth in a lot of our Western European markets.

In the U.S., I mean, it's still early. I believe you're going to see the same type of trend in the U.S., but we're kind of in month 2 right now, and there's significant demand with the accounts that we do have, and it's very -- we're very focused on getting the training done. But I do believe, to your question, I think it has the potential to drive, certainly account acquisition.

The next question comes from Caitlin Roberts of Canaccord Genuity.

Congrats on the quarter. Just a quick one. Have you added all the reps that you plan to add for Preserve in the U.S.? And just appreciate the guidance on MIS, but could you break out potentially Preserve and Mia? And any updates on the timeline for you guys to bring Ergo2 into the U.S. and eventually Mia?

Yes. So thanks, Caitlin. The split between the Preserve and Mia, a bulk of that is really driven by Preserve is the key driver for us. We expect that to be a significant growth driver for us moving forward. And as it relates to Ergo2, I mean, we -- currently, we've had good discussions with the FDA. We're trying to really align on what the appropriate regulatory requirements are for us to get that approved with the FDA. But we don't see that as a significant driver for us until probably around 2028. I mean, we have a lot of growth opportunities as it relates to Preserve currently.

As you asked, I mean, we are expanding our sales force. Currently, we're at 50 reps, but we're going to continue to expand that opportunistically when there's a geographical opportunity, but also more importantly, getting the right talent. I think we've been very successful in what I consider to be a best-in-class organization. And in this industry, bringing over high-quality sales reps that have the established relationship, and that makes a big impact, and we've been able to do that.

The next question comes from Joanne Wuensch of Citibank.

I've got a big picture one. What are you seeing in the macroeconomic environment? And specifically, I'm concerned or thoughtful of the consumer and the impacts to the Middle East as it might relate either to sales or resin or oil prices or anything on the bigger landscape would be helpful.

Yes. Thanks, Joanne. I think that's a great question. I mean, obviously, that's top of mind for anybody that's running a company. And I think as you look at what's going on in the Middle East, I think, first off, just looking at the Middle East, as we highlighted in the prepared remarks, it represents 5% of our total sales. Not surprising in Q1, we didn't have any orders. But we are -- we do have orders in the system in Q2, and we expect to be shipping to the Middle East this quarter. So there is some demand there.

But I think the key question is what you highlighted, what is the potential overall macro impact? And so far, Joanne, we have not seen an impact on the global demand for the number of procedures. And that's something that we're going to continue to closely monitor.

As it relates to areas in terms of cost, I think we've seen some -- and I can let Sandra answer this, but we've seen some impact in terms of outward freight. There has not been an impact in terms of our silicone costs because those are locked in for the full year. So I would say, in general, we haven't seen a significant impact, but that's something we're going to monitor very closely. Sandra?

Yes. I think Peter hit it. We're seeing some initial surcharges on outbound freight. But at this time, we've been able to navigate through and hold our margin profile. Our silicon provider, we recently have locked in volumes, and we have a contract with them through the end of the year. And we'll monitor the situation and look to protect our margins with any type of price as it progresses.

The next question comes from Allen Gong of JPMorgan.

I just had a quick one on the guidance and just the momentum that you're seeing. You talked about how orders are up 30% from 4Q to 1Q. I guess first quick one, is that a U.S. comment? And also, given that kind of momentum, how should we feel about the cadence for the balance of the year, particularly what you're seeing in the second quarter given the reiterated guide or guide just to beat in the first quarter?

Yes. Allen, I'll kick it off. But just to clarify that, I mean, when we talk about the orders, that was specific to the U.S. We're -- as we highlighted in the prepared remarks, we're increasing the number of accounts, but also we're increasing the utilization rate as the surgeons work through their schedule. So it's a combination, and it's reflected in the average daily orders. So we see very strong momentum going into Q2 as well. And -- but that's not just in the U.S. I think in overall, globally in a lot of markets, we've -- the demand has been stable.

And I think the one outstanding question that we had going into as we're managing the business like a lot of different companies is what's the impact of the Middle East. And as I mentioned before, it is a small part of our business. We do have orders in the system for Q2. So there is demand there. And we have not seen the impact in terms of global demand, but that's something we're going to monitor. So based on that, gave us the comfort to raise the guidance. We had a strong Q1, and then we're off to a good start in Q2. So that gave us the comfort around that.

The next question comes from Matt Taylor of Jefferies.

I wanted to follow up on the silicon supply comments. I know that this year, the contract is set in stone. But could you address the potential for cost increases beyond that? Maybe give us an update on how negotiations are going and when we could expect an update?

Yes. Thanks, Matt. It's a good question. I mean, we have a very good relationship with NuSil. I mean, it goes back for a number of years. And obviously, as we continue to grow as a company, we become a more valuable customer to NuSil. And we've had very productive conversations with NuSil. I mean, we consider them very good partners. In fact, that we've aligned or we agreed on volume commitments for this year, just about a month ago. So the prices are locked in for this year. We've made that commitment. Obviously, that's an increase in volume versus last year.

And we've started conversations around a long-term agreement. And there's interest on the NuSil side to have an agreement as well as for us to have an agreement 5 years or more. And a lot of the conversations are less about pricing. It's much more about co-development work. They're interested in exclusivity with us and looking at the length of the agreement. Generally around the price is more volume driven. But the conversations are very productive. And as I mentioned before, we are -- continue to be a bigger part of their business. And they've been good partners for us in the past, and we expect that to continue moving forward. So we haven't finalized the conversation, the discussions on the agreement, but there's strong intent to have a very -- a long-term agreement for -- with NuSil.

The next question comes from Mike Matson of Needham & Co.

I just wanted to ask one on the refinancing. So by our math, it seems like without the additional $35 million draw, there could be a slight increase in interest expense of maybe like [ $1 million ] a year. Is that right?

Yes. Thanks, Mike. So yes, so on the new debt agreement, we've increased it from $225 million. And the current draw is $265 million. There is a lower interest rate at 8.75%. There's ability to PIK, which gives us some near-term cash availability, which we take. So net-net-net, there is neutral to slightly up on the increase in the availability of the funds with the lower interest rate and then the exercise of the PIK.

The next question is a follow-up from Anthony Petrone of Mizuho.

One for Sandra, just on gross margin here, guidance 71.2% to 72.2%. How much of that is just kind of a reflection of Preserve at higher prices? And have you baked in an FDA clearance for reconstruction and just what that can bring to the table in terms of gross margin momentum?

Yes, Anthony, good question. So our gross margin improvement, and we do expect that it will continue to contribute is the growth of the U.S. With the U.S. business being a direct account, it improves our margin profile, and you're seeing that in our numbers. And then obviously, with OUS being further along in the journey on minimally invasive, its growth in the direct business and then the launch of minimally invasive in the U.S., that also is a big contributor to the margin.

So as we look forward, we do expect that we will continue to improve that margin based upon the mix of that business, both U.S. and OUS as well as the minimally invasive. And at this juncture, we do not -- we can't necessarily time the FDA approval. So we've made no assumptions in regard to reconstruction.

Ladies and gentlemen, that is all the time we have for questions today. I will now turn the call back over to Peter Caldini for closing remarks.

Thank you, everybody, for joining the call this morning. I appreciate the time and really having everybody get to hear more about the progress we're making with Establishment Labs. As we highlighted or as I highlighted in the commentary, it's a great opportunity. I hope to see at some of the events, but also please take us up on the offer about visiting us in Costa Rica, and you really get an opportunity to really see the uniqueness of this company and the strengths that we have and just to build that partnership. So thanks again, everybody, for joining the call, and look forward to seeing you soon. Thank you.

Thank you, sir. Ladies and gentlemen, that concludes this event. Thank you for attending, and you may now disconnect your lines.

Good afternoon. Welcome to the Establishment Labs Fourth Quarter 2025 Earnings Call. [Operator Instructions] As a reminder, today's call is being recorded. I will now turn the call over to Raj Denhoy, Chief Financial Officer. Please go ahead, sir.

Thank you, operator, and thank you, everyone, for joining us. With me today is Peter Caldini, our Chief Executive Officer. Following our prepared remarks, we'll take your questions. Before we begin, I would like to remind you that comments made by management during this call will include forward-looking statements within the meaning of federal securities laws. These include statements on Establishment Labs financial outlook and the company's plans and timing for product development and sales. These forward-looking statements are based on management's current expectations and involve risks and uncertainties. For a discussion of the principal risk factors and uncertainties that may affect our performance or cause actual results to differ materially from these statements. I encourage to review our most recent annual and quarterly reports on Form 10-K and Form 10-Q as well as other SEC filings, which are available on our website at establishmentlabs.com.

I'd also like to remind you that our comments may include certain non-GAAP financial measures with respect to our performance, including but not limited to sales results, which can be stated on a constant currency basis or EBITDA, which we disclosed on an adjusted EBITDA basis. Reconciliations to comparable GAAP financial measures for non-GAAP measures, if available, may be found in today's press release, which is available on our website. The content of this conference call contains time-sensitive information accurate only as of the date of this live broadcast, February 24, 2026. Except as required by law, Established Labs undertakes no obligation to revise or otherwise update any statements to reflect events or circumstances after the date of this call.

With that, it's my pleasure to turn the call over to Peter.

Good morning, and thank you all for joining us today. Q4 2025 was another standout quarter for Establishment Labs. Fourth quarter revenue was $64.6 million an increase of 45.2% versus Q4 2024 including Motiva revenue in the U.S. of $17.3 million. This brings our 2025 total revenue of $211.1 million an increase of 27.2% over 2024. U.S. Motiva revenue in 2025 was $45.6 million a number that I'm sure significantly exceeded everyone's expectations. As our business scaled, the operational leverage that we've been talking about is coming into focus. Q4 had us exceeding 70% gross margin for the second consecutive quarter, and our margins will continue to improve. Our fourth quarter net loss from operations was $3.9 million down 79% from Q4 2024. Our Q4 adjusted EBITDA was positive $5.5 million, up from the negative $13.1 million we reported in Q4 2024. This trend should continue throughout 2026, culminating in our first positive cash flow quarter this year.

In 2027, we expect to be cash flow positive for the entire year and our margin should improve for years after that. With this trajectory and our ending cash balance is $75.6 million in 2025, we have no need for additional capital. As noted at the JPMorgan Healthcare Conference, we are profitable not only setting guidance for 2026, but also providing some visibility into 2027. As such, we are giving guidance for 2026 and of $264 million to $266 million, and there may be some upside to these numbers. At a minimum, this is a 25% growth and we believe that 2027, we will see at least this level of growth as well.

Q4 capped off a remarkable 2025 for Establishment Labs, we didn't just see the U.S. market for growth in the years to come. We established ourselves as the company transforming the industry, materially changing and increasing the conversation about breast aesthetics. The $45.6 million in U.S. revenue and approximate 20% augmentation market share exiting 2025 is something that took the last new entrant almost 10 years to achieve. And we did in 1. How do we accomplish this?

Well, first off, there's been a complete lack of innovation in breast aesthetics for decades. We have had an active R&D pipeline since 2010 and which continues today and is unparalleled in the industry. Our R&D investment continues to translate into highly differentiated products that address significant unmet needs in the market. When patients review or hear about the FDA study complication rates for today's commercially available implants, they recognize that Motiva should be part of the decision when selecting both a surgeon and an implant.

Plastic surgeons tell us that when patients are presented with different implant options during consultation, 9 out of 10 choose Motiva even at a higher price point. This isn't just about data for them. Patients are gravitating towards Motiva when they compare implants in their hands. When doctors dig into the science and data behind Motiva, they find rigorous scientific literature that details our technologies and why implants are designed to create better patient outcomes.

The process of consideration has been amplified and is actively discussed across social media. There is a new era of transparency that has evolved as women share their journey and talk openly about their aesthetic goals and decisions. An estimated 300,000 women get a primary breast augmentation every year in the United States, and it continues to be the #1 aesthetic surgical procedure annually, but it has always been a secret shared quietly. Social media has created a new paradigm where aesthetic and beauty secrets have become normalized. We believe that the combination of our innovative products and this new era of transparency is creating meaningful market expansion, and we can already see the start of this trend. It is not just patients that are excited about Motiva.

For the first time in a very long time, plastic surgeons have a product and a surgery to talk about. It's new, it's differentiated, and they are taking the social media to talk about it. Their excitement and passion for Motiva and what it means for breast augmentation comes through and patients are responding. We are very thoughtful in how we spend our marketing dollars. And obviously, compared to some of our competitors, our resources are limited. But the marketing value we are receiving from patients and doctors is a competitive advantage and is very difficult to compete with.

Our innovation and its reception in the market is driving adoption and plastic surgeons report to us that many patients come in asking for Motiva by name whereas prior to Motiva, they would really ask for a brand. All this has led to one of the fastest product launches in breast aesthetics history. The momentum has continued in Q1 of 2026 and with both January and the first 2 weeks of February, exceeding our expectations.

Since launch in late 2024, we have onboarded over 1,500 accounts, we continue to sign up new practices every day. January and February are peak conference months for plastic surgeons and Motiva continues to dominate the podium discussions with surgeons actively seeking us out at these events to learn more and engage with us. It certainly appears our growth curve will continue.

In a recent blinded survey of plastic surgeons, 88% said they either use or are interested in trying Motiva with the top reasons including patient-driven demand, an unmatched safety profile, the benefits of SmoothSilk surface and the opportunity for above the muscle placement. In this survey, 75% of surgeons noted, they've been asked for an implant brand by name and surgeons reported that 93% of the time, that brand was Motiva. Patients actively seeking out Motiva is having a significant impact on account volumes. In that same survey, surgeons with greater than 50% Motiva share in their practices saw year-over-year growth in augmentation volumes that was more than double that of surgeons primarily using another brand. This is important because while many early adopters have moved the majority of their volume to Motiva and are seeing the benefits of this on their practice volumes the opportunity to grow our share of procedures and accounts remain significant. This is not surprising given how clinic onboarding has ramped up over the year and because many surgeons plan and schedule surgeries months in advance.

As we move through 2026, we expect to see our share in these accounts to move meaningfully higher. These efforts are being supported by a best-in-class commercial organization. In 2026, we plan to expand our U.S. sales force with the addition of up to 15 more sales representatives, a majority of whom have already been hired. This team of seasoned industry veterans are in plastic surgery accounts every day pushing our share higher. 2025 was also the year we started to introduce the concept of minimally invasive breast augmentation through our early experience of Preserve. We had strong global demand, and we're confident that patients and doctors in the U.S. would be equally receptive. If Motiva implants alone were exciting in the U.S. market what would that technology plus the promise of smaller incisions, minimal anesthesia and fast recovery bring. The acceptance and demand outstripped even our own expectations.

For decades, plastic surgeons contended, these ideas were not important to patients. You just have to look at the social media response and know that patients feel very differently. We have 2 types of women choosing Preserve. The first are women that are already committed to the idea of breast augmentation, but are now choosing Preserve at a much higher price point because of the benefits over traditional augmentation. The second are women that were simply not interested in legacy breast augmentation procedure, but are now considering and booking surgery. For that second group, it may have been the aversion to general anesthesia, the fear of extended downtime that disrupts daily life or a number of other factors. Regardless, they are now part of a whole new group of consumers considering the possibility for the first time.

Of the organic leads that have come through the Preserve's section of our website pre-launch 81% of patients looking to get connected with the surgeon said they are only interested in getting a breast augmentation if they can get Preserve. This marks a meaningful paradigm shift in the industry with Motiva uniquely positioned as the only solution meeting evolving consumer interest. We charge about 2x more for Preserve than we do for traditional breast augmentation. Preserve is not only expanding the market on a dollar basis. It's expanding procedure volumes as well. Based on our U.S. early experience, we are seeing expansion in the category. Approximately 15% of Preserve patients in the U.S. reported they were not previously considering a breast augmentation prior to learning about the procedure.

In March, we are moving from our early experience to a full launch. We have trained more than 90 surgeons many of whom report patient wait list and women traveling across the country to access the procedure. In a recent survey with consumers on Preserve, over 55% of patients considering breast augmentation indicated a willingness to pay a premium and surgeons are currently charging 30% to 50% more than traditional augmentation. The average breast augmentation of America is about $9,000, and currently, the average pricing for Preserve is more than twice that. This pricing reflects the value of a less invasive tissue preserving option with faster recovery and minimal anesthesia. We expect to have at least 200 plastic surgeons trained by the end of 2026.

If you're doing diligence around the impact that Preserve is having, I suggest talking to surgeons that have performed a number of cases. At least 5 surgeons have already done more than 40 cases in geographies that span coast-to-coast. Surgeons cite the benefits of Preserve to patients, but also to their practices. One plastic surgeon told me recently that preserve was game-changing. He used to have a local practice occasionally regionally. Now he has patients flying in from all over America. Another plastic surgeon that methodically tracks her metrics reports that she's able to do 3 or 4 more operations per week with the time that Preserve saves here. Our minimally invasive surgery portfolio is a real win-win for all. Patients are getting access to benefits that are incredibly important to them. Surgeons are able to charge more per patient and do more surgeries at the same time, better experience for patients and better businesses for surgeons.

In December 2025, we also submitted Motiva implants to the FDA for approval in primary and revision breast reconstruction. Reconstruction represents a significant strategic opportunity as it effectively doubles our total addressable market in the United States while offering higher average selling prices. Motiva Flora breast tissue expander is already in 200 facilities nationwide, and this footprint should continue to expand as we move closer to FDA approval. In addition, we remain active in communications with the FDA regarding our small size of submission, which will further expand our portfolio, meet a broader range of patient needs and allow us to take a higher percentage of cases by surgeons already using Motiva.

Beyond these initiatives, Mia, Ergonomix2 and GEM are also part of the innovation pipeline that we're working to bring to the U.S. market in the coming years. Along with our success in the U.S., our OUS performance remains strong and well diversified. A major focus for us in 2025 was our direct market and we have seen very good results. The number of accounts in many of our direct markets continues to grow, underscoring the strength of demand. European direct markets delivered more than 20% growth for the third consecutive quarter, led by outstanding performances in the U.K., Germany and Spain. In Latin America, results have stabilized in Brazil, while Argentina continues to post strong growth.

Additionally, our recent acquisition of Benelux exceeded our expectation in the first year. While distributor markets can fluctuate based on the timing of orders, we are seeing healthy demand globally. Across APAC, China remains a key focus, and we're actively working with the local distributor and seeing improved performance. Our minimally invasive platform, Preserve and Mia continues to demonstrate strong momentum outside the United States. Preserve is now available in 33 global markets with demand exceeding expectations and more than 700 accounts opened. Mia outperformed the $8 million to $10 million guidance in 2025 and has more than doubled the number of accounts compared to 2024. Notably, all Mia clinics have adopted Preserve, enabling them to offer the benefits of a less invasive augmentation solution to a wider range of patients at price points far greater than a traditional breast augmentation.

Globally, we expect demand for a minimally invasive platform to exceed $30 million in 2026 and continue to be a key growth driver in years to come. As I'm sure you have noted, we issued a second press release this morning around the management transition we're making effective March 9, which is really about getting Establishment Labs ready for our next phase of growth. Over the past several years, we have been focused on driving efficient execution and scalability. We are now adding additional leadership to sustain operational momentum while ensuring oversight of initiatives that require deep business expertise and strong leadership.

With this, we are delighted to have Raj transition into the role of SVP Global strategy. His deep understanding of our business, strategic perspective and broad industry experience will be instrumental. There are a number of initiatives underway that should keep us at a very high growth rate for the foreseeable future and exactly how we execute these requires extensive planning and oversight. Along with this, we are pleased to welcome Cassandra Harris as our new Chief Financial Officer. Her strong background in operational excellence and proven track record of strengthening financial discipline while enabling growth will be critical as we execute on our priorities ahead.

I will now turn the call over to Raj.

Thank you, Peter. Total revenue for the fourth quarter was $64.6 million, an increase of 45.2% from last year. Excluding the positive impact of foreign exchange in the quarter, growth would have been approximately 39.4%. Sales from Motiva in the United States were $17.3 million. On a geographic basis, in the fourth quarter, sales in Europe, Middle East and Africa were 41% of the global total. We saw strong growth in the region overall, including another good quarter in our direct markets where we exceeded 20% as well as good demand from our distribution partners. Sales in United State were 26.8% of the global total. Latin America was 18% of sales. Brazil remained stable, and we saw good growth in Argentina or other direct market in the region as well as from our distributors. Asia Pacific was 14.1% of sales.

Results in the quarter reflected the comp in the year ago period where we saw sales to our Chinese distributor as well as the normal ebbs and flows of distributor purchase timing. Gross profit for the fourth quarter was $45.5 million or 70.5% of revenue. This was a 200 basis point increase compared to the 68.5% of revenue last year. Overall, in 2025, our gross profit margin increased 330 basis points compared to 2024. Primarily the result of the higher margin sales in the United States. SG&A expenses were $44.0 million and were flat compared to the fourth quarter of 2024. R&D expenses for the third quarter were $5.4 million.

Total operating expenses for the fourth quarter were in line with the year ago period at $49.5 million. Adjusted EBITDA was positive $5.5 million in the fourth quarter. This compared to a loss of $13.1 million in the fourth quarter of last year. This is our second consecutive quarter of positive adjusted EBITDA. The $18.6 million improvement year-over-year in adjusted EBITDA was driven by the strong sales and the higher gross profit in the United States. But we've also been very focused on managing our operating expenses overall.

Over the course of 2025, we grew our U.S. commercial operations, and we launched the second offering in our minimally invasive portfolio. We're able to do this and still generate increasing profitability by finding efficiencies across all parts of the organization and making structural changes when needed. Cash increased $4.9 million in the fourth quarter to $75.6 million. The increase was primarily the result of reduced operating cash use as well as inflows from option exercises.

For 2026, our initial revenue guidance is for $264 million to $266 million, an increase of 25.1% to 26% over 2025. We expect our OUS business will grow in the single digits, and the U.S. will exceed 30% of overall sales, which is up from approximately 22% in 2025. Gross margins are expected to increase 200 to 300 basis points. Operating expenses in total are expected to be approximately $195 million to $200 million in 2026. However, as we saw in 2025, there can be some variability in quarterly spending levels based on the timing of expenses. We expect to be adjusted EBITDA positive every quarter in 2026.

Cash use will continue to improve over the course of 2026. Our free cash use is expected to be less than half of what it was in 2025, and we expect to reach cash flow positive this year without the need for any further equity raises. Our credit facility will enter the last year of its term in April and we are considering a number of refinancing options. Overall, our financial outlook reflects a significant momentum in our business. The adoption of Motiva in the U.S. is still early with significant room to drive further practice adoption as well as penetration within accounts. Preserve will add to both procedure growth as well as our realized ASPs. Outside the U.S., global demand remains good and our focus on direct markets and our minimally invasive portfolio should lead to another solid year of results.

Now on the P&L, gross margins are benefiting from the positive geographic and product mix playing out. Even with continued investments, incremental operating spending over the next few years will be at a rate well below top line growth. This leverage should allow us to achieve cash flow profitability in the second half of the year and is the basis of the meaningful and increasing earnings we expect to see in 2027 and beyond. We continue our work to make ESTA eligible for inclusion in a number of indices including the Russell. Recent updates have increased our confidence that we will be included this year.

Finally, as Peter mentioned, I'm moving into a new role at Establishment Labs. With the company on a good financial footing, Peter and I have been discussing the best way for us to realize the significant potential we have to create shareholder value. ESTA is in a very unique situation with unmatched innovation and products and a pipeline that even further distances us from our competitors. To realize this, effective execution is the key. The company has grown very organically over the past 20 years and there are number of areas that have the opportunity to be strengthened. After 5 years as CFO, I'm looking forward to a new challenge of leading our global strategy. In this new role, I will remain actively engaged in driving our performance, but the day-to-day finance function and CFO role transition to Sandra Harris, who was selected after an extensive search.

With that, I will turn the call back to Peter.

Thank you, Raj. While continuing to invest selectively, we are maintaining an investment pace well below the expected top line growth. We expect to achieve free cash flow positive in 2026 with meaningful earnings beginning in 2027. I'd like to thank the entire organization for a great 2025. This year, we remain focused on disciplined execution and building a global category leader.

Operator, we're ready to take your questions.

[Operator Instructions] As a reminder, this conference is being recorded. [Operator Instructions] The first question comes from Josh Jennings with TD Cowen.

Congratulations to a strong end of the year and excited for you, Raj, in your new role. I was hoping to just start on the minimally invasive portfolio. I mean, it seems clear that Preserve and Mia are pulling patients off of the sidelines a couple of years back, I think prior to your tenure Peter, the team had kind of put forward the potential for the minimally invasive portfolio to grow the market and grow breast augmentation procedure volume, maybe even double them. But can you just maybe not going to put that stake back in the ground, but can you just talk about the optimism and the trajectory of the market with minimally invasive offerings from establishment coming through? .

Yes. Thank you, Josh. I mean what we are seeing in the OUS markets with the minimally invasive platform from the early experience in the U.S. is extremely positive. I think with the benefits of no general anesthesia, smaller scars, faster recovery, I think that really resonates with patients. And we're seeing that in the marketplace and also with some of the surveys when we talk about 14% of patients that decide to do breast augmentation. We're not considering until they heard about Preserve and that's in early experience survey in the U.S. So it's a real driver for the -- what we think is not only to drive share for us in the market, but also to bring new patients and new women into the category.

So we're really seeing that benefit. And we think that that's going to continue to be a key driver. It's going to be a bigger part of our business as we go throughout this year as well as next. And our estimate and what we put in terms of the guidance, over $30 million this year, and we feel very confident with that. So this will be a real driver for us this year as well as into the future.

Excellent. Maybe just one follow-up. I appreciate you laying out U.S. revenues being roughly 30%. You are planning on adding reps around 30% higher number. Maybe just talk about where you're pulling these reps from. Are you still taking all-star veterans from the competition in the breast implant sector or the aesthetic sector? And just remind us of how productivity can ramp for these new reps as they come on board over the course of 2026.

Yes. Thanks, Josh. I mean, I think one of the key drivers for our success in the U.S. market is we've been able to put together a best-in-class organization. So if you couple that with what we believe is the best products from a performance and a safety profile and bringing together with the best-in-class organization. And we're very focused on the type of reps that we bring to Establishment Labs. And we are continuing to focus on reps that have significant industry experience that have a very good reputation in the market that have a very strong track record. And I think what's very positive for us is that a lot of these reps see us as very attractive opportunities. And that will continue to be a key driver for us in this year as well as into the future.

The next question comes from Mike Matson with Needham & Company.

So just want to start with one on reconstruction in the U.S. So can you maybe just talk about how you plan to launch into that market. And when you do get the FDA approval, do you need specialized reps? Do you need maybe like a corporate accounts type sales team? And maybe just talk about the importance of hospital contracts there. .

Yes. Thanks, Mike. I mean as you see and we've highlighted that the recon indication is a really large opportunity for us. I mean it really doubles the market potential for us. And we've already kind of seeded the market with some of the with Flora we're in over 200 accounts. As we get closer to the launch, we will be expanding -- obviously expanding our sales force. We'll probably look at a combination of some reps that will be hybrid, and then we'll have some dedicated reps specifically for the larger hospital network.

And I think that we need to make sure that we have the right coverage, right sales support to ensure that we really capitalize on that opportunity. And as I mentioned before, we've already gotten some seeding in terms with the Flora. So I think the ramp-up will be a little bit quicker. And I think -- but as it relates to the sales force, we want to make sure we have some specific coverage, but we're also going to be leveraging the existing sales force.

Okay. Got it. And then the international growth was a fair bit stronger this quarter. So was there any kind of one-offs in there, stocking orders or anything like that? Or is this truly reflective of the underlying procedure growth that you're seeing? .

Yes. I mean, I think -- listen, this year, we made a very strategic focus on driving our direct markets. And we've really been successful in terms of driving growth in those markets. We've allocated resources from a supply as well as investment standpoint. We made some organizational changes, and you're seeing the benefits of that. We've had 20% growth the last 3 quarters. Preserve is also helping to drive that as well as we increase the number of accounts.

But in general, I would say that the demand across all our markets is fairly stable. And in terms of how we finished the quarter, I don't think there was any -- necessarily any stocking orders. It just sometimes what you'll find in the distributor markets. There is some different periods. It's not always a straight line. It's a little bit choppy in terms of that, but there was no efforts in terms of any type of additional inventory or stocking. It's just really based on the demand that we're getting in the marketplace, and it's also based on the good execution. Raj in terms of phasing.

No, I think that's fair. I mean it's -- as Peter noted, there's always some ebbs and flows in the distributor markets, in particular, based upon the timing of orders. But overall, demand remains very healthy across all the regions. And the direct markets, which we control ourselves, obviously, are doing very well right now. We're executing at a high level.

The next question comes from Anthony Petrone with Mizuho.

Congrats on a strong year. Congrats, Raj, on the transition and Cassandra welcome to the team if you're on the call. So maybe just maybe around the horn globally. I know the macro has come up quite a bit. It seems a little bit better maybe on a 3-month to 6-month basis here when you think of the regions? And maybe just a quick recap, where do you see the underlying augmentation markets, U.S. and in some of the core OUS markets, thinking of Europe China, Korea? And then I'll have a follow-up question.

Yes, Anthony. The question is really on the underlying markets. I mean generally, the markets feel healthy right now. the U.S., for us, we're growing at a high rate. So it's -- we're kind of well exceeding what's happening in underlying market. But as we've noted, there does seem to be some increased interest in breast augmentation procedures and I think a lot of that's been driven by the activities we're doing, certainly, but it does feel like the market in the U.S. is very healthy, and we hear that from surgeons as well with surgery schedules booked out and lots of interest. So overall, I'd say the U.S. remains quite healthy. Internationally, frankly, we're seeing the same thing.

In our distributor markets, you've seen north of 20% growth now for several quarters. That, again, is pretty indicative of what's happening on the ground and also with our share taking. And then in distributor markets, likewise, the demand seems to be quite good. China, you mentioned has been a market that we've highlighted as had some challenges. It's taking a lot of focus of management in the company. We're spending a lot of time with that distributor. And frankly, we're seeing the results starting to turn a little bit. And so overall, I'd say the markets remain healthy for us, and you can see it in the numbers.

That's helpful. And then a follow-up would be on just the Establishment Labs mix. When you think of Preserve here coming in and obviously, good feedback, but also reconstruction. Where do you think, I guess, Preserve can be as a percent of total revenues once we get into the sort of '27 to '28 time range, can it eventually be 50% of, let's say, U.S. revenues. And if that's the case, what do you think the tailwind looks like to your gross margin? .

Yes. I mean, Anthony, it is early still, right? So Preserve launched essentially a year ago in Brazil, it's February of 2025, right? And the demand we've seen has been very strong. The U.S. globally, there's a lot of interest. It is really I think caught the attention of surgeons. It fits into the way that they do surgery. A number of them are saying, why would I do surgery any other way. And so your numbers of getting to 50% are not outside of the realm of possibilities. I mean, I think we could see that kind of penetration.

And to your point about what it does to our gross margins, the ASPs we realized for a Preserve case relative to a case that only uses the implant, it's about twice the revenue for us as a company, and they are much higher margins. So it is a tailwind to what you're going to see on the gross margin side if that, combined with the ASPs in the U.S., what's going to happen with recon. It just adds to a number of initiatives that are going to support the gross margins going significantly higher over time.

The next question comes from Sam Eiber with BTIG.

Maybe I can come back to the U.S. for just a second and Peter, get your thoughts on some of the momentum you called out in the early days of 2026. And then I guess where you think you are along this growth trajectory, ,is the long-term outlook for share gains still around the same goalposts that you've laid out in the past? .

Yes. Thanks, Sam. We continue to have very strong momentum going into 2026. As I mentioned in the prepared remarks, there's a lot of opportunity to continue to gain share in the accounts that we're already in as we increase the utilization rate as the surgeons work through their scheduling. We're also going to be continuing to add accounts, so like put more accounts on the top of the funnel. So that's going to be significant drivers for us. As we mentioned also, we're going to be adding up to 15 reps. And a bulk of them have already been brought on. We started that process. I think we mentioned in the last earnings call that we're going to start that process at the end of last year. So we've had close to 10 reps join the organization so far, and we're going to continue to bring those reps.

So that's going to be a key driver for us, then you overlay the fact that we're going to be launching Preserve and the strong performance that we've seen outside the U.S. But also in terms of the early experience, it's creating a lot of excitement in the U.S. market. So that will continue to be a key driver for us in 2026. We'll also -- we're expecting to get the smaller sizes approved in the first half of this year, depending on the FDA, but we're very confident we should have that in the first half of the year. And that's just going to really be the start of the super cycle of innovation that we mentioned before with the Recon indication, which we are expecting to be a key driver for us in 2027. Also looking at ERGO2, which will enable us to bring Mia to the marketplace. So our plan is still the same. We expect to be a dominant share in the U.S. market. We're on that path to get there. And I think that's probably going to happen a little bit sooner than I think we originally planned just based on the strong momentum we've had so far.

Yes. Sam, if you look at the guidance we've given for the U.S. for it to exceed 30% of our sales, it's almost 1/3 of our sales will be coming from the U.S., if not more. in the second full year. So we've got a lot of momentum in the U.S. is going very, very well.

And then maybe just following up on the last point. Obviously, you guys have a lot of organic opportunities with minimally invasive and Recon. But maybe longer term, are there any gaps in the portfolio or maybe you're looking at that you have this -- the infrastructure now where maybe you could be adding additional capabilities to the portfolio? .

Yes, Sam, it's a good question. And I think it's part of the reason for my transition into this global strategy role is that with the financial performance of the company in a very good spot. There are things like you're describing, business development, go-to-market strategies, the way that we prioritize things in our portfolio of innovation that I can now spend more time focusing on, right, because there are significant opportunities as you're describing to continue to expand what we're doing and to really realize the potential of what this company has put into motion.

Congrats on the transition here.

The next question comes from Allen Gong with JPMorgan.

You touched upon it already in response to some other questions. But I'm just curious about the contribution you're currently factoring into the 2026 guide from some of the pipeline products you have between small sizes and reconstruction I.s construction going to be more of a 2027 story? And how quickly can you really ramp that up once you get the approval since as you mentioned, you're already seeded in around 200 hospital facilities.

Yes. So on reconstruction, it is likely a 2027 and 2028 and beyond the story for us, right, because Obviously, it's still with the FDA. We -- nothing has changed the opinion that, that product is approvable and should be very soon. But then there is the blocking and tackling of simply getting into hospitals, right? It takes time to work through the VAC committees and to get on contracts and things, and that will take time. But what we've already done is we've seen strong interest from hospitals already. We're already in a number of them. And there's a lot of interest in recon getting to market and getting in the hands of a lot more surgeons.

Yes, Allen, just to add to that, as Raj highlighted is the Recon, our expectation is that's where we're going to see the impact in 2027. So we're not really considering that for 2026. And also, as you look at Preserve, I think we see a tremendous upside in those numbers. And I think we've been very pleased with the initial response, not only in the U.S. but outside the U.S., and I think that has the opportunity for upside for us in terms of how we drive the business this year.

Got it. And then just a quick follow-up on spend. When we look at 2024, we saw a pretty linear increase in spend to support the U.S. launch this year was a little bit bumpier talking specifically about SG&A, and it sounds like you've already put in a good amount of investment into the U.S. sales force expansion you previously talked about early on in the year. So just any color on the cadence of spending on the operating side throughout the year. Should we expect it to be a little bit more front half weighted and then a little maybe improvement in the back half and then maybe next year, we see a little bit of a step up to support reconstruction.

I think your question is a good one. I mean you look at the overall spending for us. We talked about $195 million to $200 million. But if 1x is out noncash expenses and onetime things, that's $175 million, $180 million in cash operating expenses, which compares to a number roughly $160 or so, right? So the increase is well below the $50-plus million of revenue expansion we're going to see this year, right? So we are starting to see the significant leverage in the model playing out, and that's going to continue in '27 and beyond. Even the incremental investment to support the Recon market will be well below the opportunity that, that represents. And so again, that's another source of leverage for us.

As it relates to kind of the timing, it is not linear, right? We do have certain expenses that hit at certain times. As the first quarter will actually likely be a little below trend and that it will pick up in the back half of the year. But we're supporting a lot of the U.S. expansion early on and then it will continue to be leveraged over the course of the year. But it's not going to be kind of flat every quarter, as you described. It will be a little up and down with the first quarter, perhaps being a little lower and then picking up in the middle part of the year in the back half.

The next question comes from Caitlin Roberts with Canaccord Genuity.

And congrats on all the new rules to all. As it relates to revenue guidance, anything to call out from a seasonality perspective this year, particularly as you ramp further in the U.S.

So it's a good question, right? Because the U.S., we do expect is going to continue to grow, right? So sequentially, we should be up in the first quarter, modestly right? It is a quarter where it's usually a down quarter for the market overall, and then you'll see kind of continued step ups every quarter with a very strong finish to the year in the U.S. Again, following normal seasonality. Internationally, it's a bit more normalized because you're not right, growing the same rate you are in the United States. And so overall, be that similar pattern where the first quarter is down. You see a pickup in the second quarter. It's down a little bit in the third quarter, and we see a very strong finish to the year. But you do have the subtlety of what's happening in the U.S. with the very strong growth we're seeing overall.

Great. And then just one more. Just how many of your current accounts in the U.S., would you say are high-volume accounts? And then any color on kind of the average penetration within your accounts? .

Yes, it's a good question. I mean, when we started a little over a year ago, we did sign up a lot of high-volume, larger accounts, a lot of interest in the product that's broadened out a bit. The 1,500-plus accounts we have now kind of span the spectrum of where we are. And I would say, while it's hard to get exact numbers on penetration, we're still quite low in a number of markets, and that's based primarily on the timing of when these accounts came on, right? So account that's been with us for 6 months or less, it's going to be lower than one that's been with us for a year.

And so 2026, the story for us is going to be about continuing to expand the number of accounts that we have in the United States but also going quite a bit deeper into all these accounts. And that's what's really going to drive the results. There's a lot of potential there. We're still early in a lot of the customers we signed up over the back half of last year.

Yes. Caitlin, just to add, we -- that's going to be a big focus for us in 2026. Obviously, in the beginning, you want to get as many accounts and the early adopters, I think we've really seen strong push where Motiva is a majority, if not almost all their volume. It's really now the next phase is really enhance that penetration, and that's a big focus for us. I think there's a lot of opportunity in that area. I think in certain accounts we're underdeveloped, now granted that's going to happen over time as they work through their schedules. But as Raj noted, this is a key driver for our growth this year.

The next question comes from Mason Carrico with Stephens.

I guess, first, could you just talk about your expectations around China this year? What are you baking in there? Sorry if I missed it. And really, what do you view as kind of the key hurdles to unlocking that market, whether it be in 2026 or 2027 or a future year.

Yes. Thanks. As we mentioned in the prepared remarks, and we've really communicated this in the last couple of calls. This is a big focus for us. And I think the start in China in terms of the distributor building out their commercial capabilities was slower than we would have liked, and we put a lot of focus in that area in terms of -- around their organization in terms of some of the strategy and targeting different hospitals pricing and we've been very pleased over the last 6 months in the back half of the year that we're seeing very good progress in terms of the sellout. So I think a lot of this work is really having an impact. And our expectations remain the same. This market is a very large market when we expect to have the same type of dominant share in China that we do it throughout the rest of Asia.

Got it. Okay. And with the longer Preserve this year, it seems like ASPs and the ASP should benefit. So I guess, how much of U.S. growth in 2026 do you really see coming from volume versus ASP expansion? Or I guess how do you think about that algorithm, that growth algorithm even moving into 2027? .

Yes. I think, Mason, we're still so early in the penetration in the United States that the majority of the growth is going to come from continued unit growth, right, if that's how you described it, right? So continue to take share procedure volume, that is what's going to drive the revenue. Preserve certainly going to contribute. We're going to launch it here in the first quarter very soon. And it will play out over the course of the year. But for us, it's still primarily about penetration into this market and taking share from the incumbents.

Thank you. That is all the time we have for questions today. I would now turn the call back over to Peter Caldini for closing remarks.

Thank you, operator, and thank you, everybody, for joining the call today. We've made tremendous progress over the last 12 months. I think we're in very good position to really capitalize and I think on a unique opportunity and the strength that we have, especially around our products and pipeline. So very happy with the progress and really appreciate everybody joining the call today, and look forward to talking to everybody in the future. Thank you.

Thank you. This does conclude today's teleconference. You may disconnect your lines at this time. Thank you for your participation, and have a great day.

Okay. Thanks, everyone, for being here. I'm really excited to be introducing some of the management team from Establishment Labs. We're going to be starting off with a presentation from CEO, Peter Caldini, and then Raj Denhoy, CFO, will be joining us for some Q&A afterwards.

Great. Thank you. Thank you very much. It's a great pleasure to be here, really an opportunity to share some exciting news and exciting update on Establishment Labs. We just completed a very successful 2025. And I think most importantly, we're very well positioned for strong significant growth in 2026 and beyond. So for those of you that are not as familiar with the Establishment Labs story, we are a medical technology company focused on breast aesthetics and reconstruction. We really drive innovation to improve women's health and well-being.

So we've been around for 20 years. We sold over 4.5 million devices worldwide, and we're in 90 countries. And just recently, after getting the FDA approval at the end of 2024, we've launched in the U.S., and we've had a very successful start in our first year. Some of that growth is really unprecedented what we've seen in the market in the past. But it's really our science-based innovation that is really setting the standard for breast aesthetics and reconstruction by delivering really differentiated products in the marketplace that's unmatched from a safety and a performance standpoint. We just preannounced our strong results in 2025 on Monday, grew 27% on a global basis. But more importantly, the growth in the U.S., we achieved significant revenue growth, and it's not been seen before in the market in the U.S. And I'm going to provide some more information on that.

And then also, we're not stopping there. Real growth moving forward is going to be around our minimally invasive platform. This really has an opportunity to revolutionize the category. It's by providing patients with superior outcomes. And then also what we're seeing in the marketplace. And some of this is driven by us, but it's also some of the tailwinds you're seeing from GLP-1s that's really giving an opportunity to expand the marketplace, and I'm going to share some information on that as well. But a big focus for us in 2025 is really around driving profitability. And I think we've seen a lot of great success on that. And as we grow and drive our revenue growth, we're very well positioned to drive significant profitability moving forward.

Now something about our implants. There is nothing like our implants in the market today. Every Motiva implant has 4 patented technologies, one of which is SmoothSilk, the SmoothSilk surface that enhances biocompatibility and reduces the level of inflammation as well as bacterial attachment. And when we looked at launching in the U.S. several years ago, we could have come out with a me-too product. It would have been faster, it would have been cheaper, but we really wanted to make sure we came to market and we developed a superior, better product than exists in the marketplace. So by leveraging the technologies, the 4 technologies that we have, we're able to provide implants for patients as well as surgeons that is unmatched from a safety as well as a performance standpoint.

Now this is seen with our FDA clinical study data, okay? When you look at the 5-year data point, we have less than 1% device-related complications. Now when you compare that versus some of the competitive products, same time horizon, same type of clinical studies, you'll see up to 10x greater device-related complications. So it's that product of the performance, the safety that has enabled us to have the success that we've had in a market like the U.S. So for example, what we've been able to achieve in the U.S. in terms of our revenue growth and share growth has -- is far superior than what the latest or the last entrant into the category, which is Sientra that's no longer around, that took them 10 years to achieve.

As I mentioned, we had a very successful 2025 from a revenue standpoint as well as driving profitability. We preannounced 27% growth. So we're in the revenue range of between $210.5 million and $211.5 million. Very strong fourth quarter. We had a record fourth quarter in our OUS market, but also, most importantly, strong growth in the U.S. market, $45 -- over $45 million in just the first year. So that's from a revenue standpoint, but a lot of our focus was around driving profitability, be more efficient in terms of how we manage the business. We achieved EBITDA positive in Q3. We expect that to be the same in Q4 and continue in that trajectory. But we also improved our cash balance to $75.5 million at the end of last year, end of 2025 versus -- and that's about a $5 million increase from Q3 2025.

So let's talk about the U.S. launch, been very successful. It's one of the fastest launches and probably the fastest launch in the breast aesthetics history. And one of the key drivers for that success is really we've been able to assemble a best-in-class organization over the last 18 months. And you couple the organization with the implants and the profile in terms of our performance and safety has enabled us to achieve the $45 million in just the first year. We estimate that we're exiting -- or we exited 2025 at a market share rate of approximately 20%. And we keep on driving that growth with adding additional accounts, increasing the utilization rate. So that's just the beginning.

So that's our first year, and we expect continued growth in 2026 and beyond. What's some of the drivers for the market share growth in the U.S. If you think about the breast implant category, there really hasn't been a lot of new news. It's been relatively stagnant. There hasn't been a lot of innovation. There's been limited marketing support, and we came in with new news, new innovation, but also a lot of marketing support. And we've been able to not only drive awareness for Motiva, but also for the category as a whole. For some examples of that, we had over 9.2 billion impressions in the first year. And I think it's what's very monumental and very unique in the category is patients are walking in, talking to the surgeon and asking for Motiva by name. That's unheard of in the industry.

One of the key drivers was in terms of creating that awareness, and we're the first ones to actually use celebrity endorsers, and we did a deal, a sponsorship with Meghan Trainor, which was highly successful. It not only helped drive awareness for Motiva, but it was also really starting to increase the awareness or the era of transparency. So women are starting to talk more openly about getting breast augmentation and really starting to remove the stigma attached to it. Motiva breast implants was the fastest-growing procedure in real self in 2025, so really a monumental growth. So marketing was a key driver for us in 2025, and that will continue in 2026 and beyond.

What are some of the other drivers for market share growth in the U.S. in 2026? We've talked about launching Preservé. It's our minimally invasive platform. We've rolled it out in OUS with a lot of success. We've had a number of early surgeons working with that product back in August. So it's about 50 early experienced surgeons and very positive success. And we see that the minimally invasive platform has a lot of potential, not only for us to steal share but expand the category as well. We also submitted a PMA supplement for our smaller sizes. And we believe that there's about 10% of the market that we're not currently serving that we don't have our complete matrix. So by getting that approval, we'll be able to close that gap and continue to generate additional sales. A key milestone for us is when we'll get the recon indication. We submitted the PMA supplement at the end of last year, and it's really the time line dependent on FDA. But this is a sizable opportunity for us in the U.S.

We believe once we get recon indication, we're going to generate the same type of share that we're getting in the augmentation space. Another key driver for us in the U.S., and we've talked about this previously, is continuing to expand our sales force. We're going to be adding up to 15 reps in 2026, and that continues to be around the augmentation space. Obviously, once we get the recon indication, there will be another step change in terms of supporting that side of the business. And we keep on growing accounts. We're over 1,500 right now, but it's also not only growing the accounts, it's increasing the utilization rate as the adoption curve continues to move forward.

Now a little bit about the recon indication. This is a tremendous opportunity for us. I mentioned that we submitted the PMA supplement at the end of last year. The size of the recon business in the U.S. is the same size of the augmentation from a revenue standpoint. So it really gives us an opportunity to double the market that we're currently competing in. Now we are already in over 200 locations with our Flora Tissue Expander. So once we get the indication approval, we already have a head start in terms of driving growth for the indication -- the recon indication. And so we expect the acceleration to be very quick.

Now a key driver for us moving forward in the U.S. with the minimally invasive as well as OUS is around the minimally invasive platform. Preservé will be launching in the U.S. Outside the U.S., we launched Preservé. We also have Mia. And this is really an opportunity, as I mentioned before, to not only drive growth for us, but it's an opportunity to drive share and expand the category. So this unique approach using Motiva implants and tools has the opportunity to provide superior outcome for patients. And really doing that by focusing on really reducing and maintaining as much as the breast tissue as well as the breast functionality.

So those results, you don't need general anesthesia. The recovery time is incredibly fast versus traditional augmentation, which is far more invasive and it's under 15 minutes. And the incision, which leads to a smaller scar, is certainly much more smaller. So we see this as a significant driver for our business. In 2026, it should represent over $30 million in revenue. Now a little bit about the minimally invasive, why we see this as a market expansion opportunity. We've done some market research, but we're also hearing from the early experienced surgeons in the U.S. It really targets a segment of women that is currently untapped in the category. These tend to be women that are more affluent, but there are also a lot of barriers in terms of general anesthesia, the recovery time. So this really targets those type of consumers.

In some of the market research, we've seen that 1 out of 4 patients that are exposed to Preservé are willing or interested in doing a breast augmentation and 83% of those women want to do a Preservé procedure. What we're also learning is that most patients -- almost all patients that do Preservé, what is an opportunity for us, not only for us as a business, but also the surgeons is they're willing to pay a premium. So in the U.S., with the early experience surgeons, the 50 early experience surgeons, on average, they are -- patients are spending up to 20% more than traditional augmentation, in some cases, up to 40%. What we're also hearing in terms from the early experience surgeons is that patients are actually traveling to different parts of the U.S. because it's only limited in the number of locations to do Preservé surgeries. And also, we're hearing from those surgeons that it's actually bringing in more volume and more business. So we fully expect that once we roll this out, that it has an opportunity to drive category growth for Motiva.

Now as I mentioned, we expect to do over $30 million in revenue in 2026. We already launched Preservé outside the U.S., first in Brazil, rolled that out to Europe, and we're in 29 markets, global markets. It's a key driver for our growth in 2025, and we expect that in 2026, especially in our direct markets. And we expect a formal launch in the end of Q1 2026 in the U.S. Now Mia, we continue to have very good growth in EMEA. It's much more on the premium segment. It's a transactionary approach. There is no scar on the breast. And we've doubled the number of accounts through our franchise model. We continue to see good growth as Preservé comes underneath and really expands the market as well.

Now we see a significant opportunity, leveraging the minimally invasive technology with the gluteal implants. This is a market that we believe is very underdeveloped. The current solutions are high risk and not the best outcome. So we really believe with our technology that we can leverage that, provide patients with a superior outcome, but also a safer alternative. Right now, we're doing clinical studies in Latin America. We expect that the first launch will be in 2027 in Latin America. And depending on the regulatory framework and our rollout timing, we'll be looking at rolling this out in the U.S. and Europe and Asia as well in the coming years. So a key driver for us as a business, the minimally invasive platform. We're off to a very good start in OUS markets, but that will continue in 2026 and beyond.

Now there's a number of market tailwinds out there. Everybody talks about the GLP-1s A lot of the surgeons that we're engaged with tell us that a number of women are coming in, doing and looking at breast augmentation procedures based on the impact of GLP-1s. But another key driver, and some of this is driven by us with our celebrity endorsements, a lot of the social media that we're doing is really creating an era of transparency. People celebrities are coming out talking about their -- the augmentations. People are much more public about having breast augmentations and really reducing a lot of the stigma that was really impacting the potential growth for the augmentation market. And we're also seeing a lot of mainstream media talking about breast augmentations. You have the Wall Street Journal, you have the Washington Post talking about smaller sizes, more natural outcomes.

So significant tailwinds that I think will continue to drive the market. But as I said before, a lot of this is driven by a lot of the marketing efforts that we're doing as well. Now talking about 2027 and beyond. We have a significant innovation pipeline. So it's not just about 2026. We see double-digit growth or over 25% growth in the next 2 years in 2027 and beyond. You look at the real impact that we believe that we're going to have for the breast recon indication will be in 2027, the real commercial impact. Then we talk about continuing to expand the global footprint for the minimally invasive platform.

In order to launch that in the U.S., we're going to be submitting a PMA supplement to be first half of this year. We're going to need to get the ERGO 2 approval in order to launch Mia. And then we talked about the GEM in 2027 and beyond once we start rolling that out in other geographies. But as a company, we're always going to be looking at different innovations. We're the only company in this space that focuses on innovation, and that's really the DNA of this company. And so really tremendous opportunities, really executing on what we have. There's a lot of close-in opportunities, but also in the outer years and leveraging this technology.

Now as we continue to grow, and we're very well positioned to drive incremental profitability over the next couple of years. When you look at our revenue, we're expecting to grow at least 25% over the next 2 years. But our -- if you look at our corporate infrastructure, has really already been built. So we have enough capacity from a manufacturing standpoint to do -- to supply over 50% of the global market. A lot of our corporate roles and our corporate functions are already established. So really, as we drive the revenue, it doesn't require as much investment to maintain or to support the revenue growth. As I mentioned, in this year, we broke the 70% gross margin mark. And I think that's going to continue to drive growth or continue to increase as we launch the minimally invasive platform as we continue to grow in the U.S. and also as we get the recon indication.

So significant margin expansion we expect in the coming years. And it's also a lot of our discipline in terms of how we manage the business. We've been very successful in getting to EBITDA positive. We're on track to achieve cash flow positive in 2026 by really implementing a lot of the discipline that enable us to get to this point. So in summary, as I mentioned before, 2025 was a great year for Establishment Labs, but we're really well positioned for 2026 and beyond. We are the leaders in terms of breast aesthetics and reconstruction. We're setting the standards. We continue to evolve with our innovation to drive the category. You're seeing significant growth in the U.S. We've accomplished significant share from the standpoint of our exit velocity, and we expect that to continue to grow. And then we're also going to be rolling out the minimally invasive platform, which has a tremendous opportunity for us to drive share as well as expand the market -- we are seeing the tailwinds in terms of the GLP-1s, the era of transparency, much more openness around breast augmentation. And then we have really established an infrastructure that can support our business. We expect to have very sizable profits moving forward.

So that's a summary, very exciting time in Establishment Labs. And I guess, Allen, now it's a Q&A.

Thanks for that, Peter. So I think I just want to start with the quarter that you just talked about. You already talked about it in the presentation, but put up a really good performance, $64 million to $65 million in the quarter, give or take. And the U.S. really kind of hitting the growth from third quarter to fourth quarter that I think we were really hoping to look at. But I guess just like taking it from a high level at first, when we think about the health of the underlying market, obviously, you were able to drive the growth that you're looking for in the U.S. market. You've talked about how there's market trends between GLP-1s, between social media that are continuing to support your growth. But how do you think about the overall health of the broader market when it comes to consumer spending and the durability of that into 2026?

Yes. I mean I think when you look at it on a global basis, specific to breast implants, I mean, we've seen it's a relatively stable market in most of the geographies in which we compete. So for us, with that stability and as we keep on driving share growth through our minimally invasive platform as well as what we're doing in the U.S. in terms of expanding our sales force, the smaller sizes, I think we really have an opportunity to continue to drive growth. And we don't see any issues or concerns regarding the macroeconomic environment as it relates to its impact on implants.

I guess internationally, so you didn't break it out, but clearly, based on the performance internationally as a whole, you did in line to better than expected. you break out your international markets into 3 segments. So when we think about performances across Latin America, APAC, EMEA, there's been some market challenges there. You've been able to stabilize in some of your direct markets in third quarter. But have we seen that strength in direct markets continue into fourth quarter? What was distributor demand like? And if you could talk about just dynamics between the 3 different geographies.

Yes. So I'll talk about the direct and the distributor markets. I mean that was a strategic choice by us, Allen, to kind of really drive growth in the direct markets. These are markets we have much better economics. The price point is actually double than what we have in the distributor market. And quite frankly, we're probably a little bit too dependent on the distributor marketplace. So that was still in Q4, a key driver for our performance OUS. And over time, the plan is to continue to drive growth in those markets and really reduce our dependency on the distributor business. And in terms of the geographical breakout.

Yes. I'd say, Allen, it's kind of in keeping with what we've seen over the balance of this year. As Peter noted, direct markets continue to drive the business for us. And if you think about within our segments, in Europe, we are split between distributors and direct. That market continues to do very well, again, driven by the health in the direct markets. Latin America is a bit of a mix as well. We're direct in Brazil and Argentina. We're seeing very good results in Argentina and our distributor markets there. Brazil has been a little challenging. We've talked about it, but we have seen stability in that market for the last several quarters. And then Asia Pacific is the one that is 100% distributor, right? And while we're seeing very good underlying trends in that business, there's always going to be that timing of orders, right? And so I'd say, overall, as Peter noted, the demand for our products globally remains very good, and we're seeing it across all the geographies.

Okay. And then that 25% minimum of 25% in 2026, 2027, if I look at where consensus is today, they're right at the mid-20s or 2026. So it sounds like that's the floor to next year. What needs to -- at least implies that you see a path to upside. So what is the base case that gets you to 25%? And what needs to happen for you to outperform that?

Yes. I think if you again think about 27% growth we posted in 2025, right? So we're coming off a very strong year. We have a lot of momentum heading into 2026. what we need in order to make those numbers is just continue to execute. We haven't assumed any new product approvals. We haven't assumed reconstruction revenue in the United States in those numbers. So it's really a continuation of what we're currently doing. And so far, as I noted, we haven't picked up any change in the marketplace. The demand remains very good and what we're seeing in terms of the orders even here in early 2026 remains very good.

The U.S. is definitely one of the major parts of the growth story going forward. You have tailwinds there next year between Preservé, which is going to start launching or maybe has already started launching in the first quarter of this year and also just additional sizes, reconstruction, the reconstruction might be more 2027. So I guess starting on the augmentation side and especially with Preservé, how much of a growth uplift do you think Preservé can really add? And what is your approach to the launch this year, given it might be something a little bit more familiar for physicians at least compared to, say, like Mia? And how quickly can you really roll that out? And should we think of that as being potentially a workhorse, especially in the U.S. where your ASP compared to the rest of the world is already a little bit higher?

Yes. I mean I think the Preservé launch is going to be a key driver for us, as I mentioned, not only to drive market share, but it's also -- there's a lot of indication that has the potential to expand the category. We're hearing that from the surgeons. And our rollout plan is really going to be focused on making sure we get the right education for the surgeons. So we expect that once we get that started, that it's going to really turn into a flywheel, and it's going to accelerate through the course of the year. But we expect a significant growth in 2026 on our Preservé launch, but also the things that we're doing on our base augmentation when you're adding the additional sales reps, we've already got, as you highlighted, over 1,500 accounts. As we work through that utilization, the adoption curve, that's also going to continue to increase. So I think you're going to see it on both ends, the traditional augmentation as well as on the Preservé.

So diving a little bit deeper into that 1,500-plus number. I think in the past, you've talked about how when we look at -- when we focus on the higher volume customer base, there's only like a couple of thousand that really do the majority of procedures in the U.S. So when I think about 1,500, obviously, not every single one of those is going to be one of those high-volume surgeons, but you've clearly done a very good job of going broad and really making sure that you're getting into a lot of accounts -- so when I think about the growth outlook for 2026, how much of that is from going deeper into existing accounts? How much of that is going broader? Should we think about -- maybe a lot of those are the higher volume accounts, I would imagine, and now you're going to be adding on relatively smaller accounts. So just talk about that.

Yes. So in the U.S., I think, obviously, we're going to continue to expand the number of accounts. We add accounts every day. I think Jeff today had 2 additional -- 3 additional accounts. So that's also going to continue to be a part of that growth process for us. But it's also -- I think we're going to be going deeper in increasing the utilization rate as the surgeons work through their adoption curve, I think you're going to see a lot more acceleration from that standpoint in terms of enhancing the utilization in those accounts.

And then I guess I do want to touch on the competitive landscape, right? You had Sientra, like they haven't exactly exited the market, but they've definitely maybe been deemphasizing that piece of their business. You have the large players, J&J and Alcon, but arguably, breast augmentation also isn't a big focus for them. But clearly, you've come into the market and really taken it by storm, getting to 20% share within essentially a year is a very big success. So are you seeing anything on the competitive front? Any kind of reaction?

No, I think you see a lot of one-offs. I wouldn't say there's a real concerted effort by either of those players. And I think while they're sizable businesses, when we look at it, within the portfolio of those companies, it's actually very small. And these are not categories that are very prioritized for the J&Js and the AbbVies of the world. So we haven't seen a significant competitive response. And quite frankly, I'm not sure that's surprising. These are not businesses that are priorities, and that's really enabled us to get significant traction in the U.S.

Then on the reconstruction side, you just submitted that in the U.S. in December. Your presentation has more of a 2027 benefit, but as it has the opportunity to potentially double your addressable opportunity in the U.S., definitely worth talking about. When we think about why the U.S. is a better market for that, you have better reimbursement in place. So when we think about the competitive positioning there, clearly, you're having success on the augmentation side. But is that same kind of -- I don't want to maybe call it hands off, but a little bit of a looser approach from your competitors, the same thing we can expect in reconstruction once you start launching there?

Yes. I think, first off, once we get the indication approval, I think we are going to get the same type of traction in the Recon indication that we've gotten in the augmentation. I think we -- by having that superior product, we already have establishment and with our Flora tissue expander in those accounts. So I would expect that, that acceleration actually be somewhat quicker than what we've seen from the augmentation where we're really starting at 0. So I think in terms of the competitive response, I don't think it's going to be any different, Allen. In those -- in the Recon indication, as I mentioned before, the fundamental issue is these are not categories that they prioritize.

I guess touching on more product specific. Preservé launching into the U.S. now. You've been doing -- you've been having more of an early experience internationally. It sounds like that early experience has been going well. The feedback has been good. And I just want to kind of compare and contrast that with Mia, right? In the presentation, you framed Mia as being definitely more of a premium product, but Preservé is also, especially compared to your Ergonomix1, it is also a premium product. So when I think about having your entire -- the breadth of your portfolio now with Preservé and Mia at the top, how are those kind of like working together in the portfolio?

Yes. So I mean, the first thing, when you look at the U.S. right now, it's just going to be Preservé. We are going to be submitting the PMA supplement really the beginning of this year. So I think in order to launch Mia, you need to have the ERGO 2, the ERGO 2 diamond. So I think that's more in the outer years. But outside the U.S., I think they've worked very complementary. With Mia, it's a more premium segment. There are some limitations in terms of the cup size and the type of surgeons that are willing to use it. So in a lot of cases, with the transactionary approach and the fact that the MA does not have any scar on the breast is a significant benefit, but it's much more in the premium segment. And what we've seen outside the U.S. is actually the Mia accounts are also adopting Preservé, and you're seeing hand-in-hand significant growth for both businesses. So it hasn't really cannibalized the business in the early stages. So we're very pleased with that. But they work very well together, especially when you have that segmentation and there are specific benefits for MA that you will not get from Preservé.

And then I guess, diving a little bit deeper into international markets. Latin America, I think it's been struggling for a while now. We started to see stabilization this year, but not exactly a recovery. So did that continue into fourth quarter of stabilization, but maybe not really recovery? And then what's the right expectation for 2026?

Yes. I think without breaking out the fourth quarter, we haven't provided that detail yet, we'll do so on our fourth quarter call. But as you noted, we have seen a generally good performance out of Latin America with the exception of Brazil, which has been a little challenging for us. But as I noted, it's been stable now for a couple of quarters, really the back half of last year. It's really stabilized. And as we move into 2026, we do have some programs to hopefully accelerate growth there. Preservé has launched in Brazil. We're seeing good demand for the product in that market. And so we do have expectations that we'll see some growth out of Brazil. Latin America as a whole, outside of that market has generally been pretty good for us. Mexico, Colombia, these are some of our biggest markets and there the demand remains very good. So I think overall, Latin America, we have good expectations for '26.

And then on the APAC side, right, it's a little bit interesting there because Japan and South Korea are undoubtedly success stories for ESTA where you have maybe a majority share, correct me if I'm wrong, at least a very significant share in both of those markets, and you got there relatively quickly. So I guess starting there, and I do want to talk on China after, you've already reached a really healthy share position in those markets. So how do you continue to drive growth there? You have mix upgrades, I imagine, but how do you grow the market further?

Yes. I think in 2026, the back half of 2026 as well as into 2027, we're going to be launching Preservé in those markets. That has, as I mentioned before, an opportunity not only to drive incremental share, but as you made the point, we already have sizable share. There is the opportunity to expand the market. So that's going to be a key driver in those markets and continue to drive that innovation. There's still opportunities for us to grow through our distributors. And I think we're very fortunate in the success we've had in those markets. But I think when you overlay that type of innovation with Preservé, it has the opportunity to steal additional share, but also expand the category.

On the other side, you have China, which in terms of pure market size, I think we were really bullish at the start. It was going to be the second largest market after the U.S. Unfortunately, the launch hasn't really had the traction that I think we really would have wanted in the bull case. You invested a bit more money into that business into your distributor specifically. So have you seen any of those efforts bearing fruit? And I guess just help us to understand why isn't the market doing quite as well, both maybe specifically for you and also just for breast augmentation as a whole?

Yes. I think -- I mean, there's -- certainly, I think it's pretty well known some of the macroeconomic issues in China that's really impacted our category. So I think that's kind of suppressed the market opportunity certainly in the short term. In terms of our distributor, I think we've communicated that we were not as happy with their commercial development. We've seen a lot of progress over the last couple of quarters in terms of the increase in sellout. And our engagement has really been around to optimize a lot of their strategy, pricing points and things like that. In terms of creating awareness, I would say that distributor has done a very good job in that market. It's really about them building out their capabilities. It's a large market. But we fully expect that China will have in a year or 2 to have the same type of share that we see in other markets throughout Asia.

Okay. That would be really great. So I guess like when I think about the 25% plus, that assumes in 2026, 2027, that assumes that China picks up?

Yes. So we have -- the expectation is this year, we'll have some sales in China. And then as the market progresses and our distributor progresses, we expect that to grow in 2027 and beyond.

Got it. And then shifting over to the financials with the time we have left. I think one of the big benefits, again, of having the U.S. launch performing really well is that it is a higher-margin opportunity for you. You were able to get adjusted EBITDA profitability a little bit sooner than I think you were expecting. You're still on track for free cash flow positive next year. So how do you balance investing, adding another 15 sales reps in the U.S., maybe putting a little bit more effort into China as well to really get that jump started against continuing to drive leverage and maintaining cash flow discipline.

Yes. I think as Peter noted in the presentation, the infrastructure for our company has largely been built for the last 20 years, right? So you think about the various support structures you need, finance, legal, HR, all of those functions are in place. And the incremental spending for us from this point is really around commercial, right? So adding salespeople, adding support for those people, additional shipping costs, but these expenses will grow at a rate significantly lower than what the top line will for the next couple of years. And that's where this leverage really starts to flow through. We're talking about operating expenses, but you're also seeing it to a great degree on what's happening on the gross profitability line. We were in the mid-60s, 1.5 years, 2 years ago. Now we've pressed it above 70%. The U.S., recon, direct markets, all of these initiatives that are driving our growth are all at a higher gross profit margin than we have historically seen as our company. So you're seeing the gross profit increase dramatically, and then we're able to really control the amount of incremental spending we need to support the growth. And that leverage will start to become very apparent as you move through 2026 into 2027, and that's what ultimately drives us to this cash flow breakeven that we expect to achieve at some point this year.

So as an extension to that, you clearly -- you're adding more reps in the U.S. just to support the augmentation launch, but then next year, you have reconstruction. The year after that or in 2027, you might be moving into glut as well. So when I think about the need to potentially expand your sales force to address those targets, do you think you can do that with like these additional 15 on top of the 40 or so you have today? Or will there be additional rep adds needed?

Yes. I think, again, it is -- we will continue to invest in commercial and primarily again to support the United States, as you described. But the incremental investment is around adding sales reps and the people needed to support them. So if we have 40-ish sales reps now, we'll add another 15 this year to support continued growth through '26. We'll see another incremental step-up in '27 to support recon. But if you think about the revenue potential that, that drives, given the size of the markets and the profitability of the markets in the United States, it's spending that -- it's going to -- the contribution margin from those sales over the next couple of years is going to be very significant.

Got it. Unfortunately, that's all the time we have left. Thank you so much for the time today.

Great. Thank you.

Thank you.

Good afternoon. Welcome to Establishment Labs Third Quarter 2025 Earnings Call. [Operator Instructions] As a reminder, today's call is being recorded. I will now turn the call over to Raj Denhoy, Chief Financial Officer. Please go ahead, sir.

Thank you, operator, and thank you, everyone, for joining us. With me today is Peter Caldini, our Chief Executive Officer. Following our prepared remarks, we'll take your questions. Before we begin, I would like to remind you that comments made by management during this call will include forward-looking statements within the meaning of federal securities laws.

These include statements on Establishment Labs' financial outlook and the company's plans and timing for product development and sales. These forward-looking statements are based on management's current expectations and involve risks and uncertainties.

For a discussion of the principal risk factors and uncertainties that may affect our performance or cause actual results to differ materially from these statements, I encourage you to review our most recent annual and quarterly reports on Form 10-K and Form 10-Q as well as other SEC filings, which are available on our website at establishmentlabs.com.

I'd also like to remind you that our comments may include certain non-GAAP financial measures with respect to our performance, including, but not limited to sales results, which can be stated on a constant currency basis or EBITDA, which we disclose on an adjusted EBITDA basis.

Reconciliations to comparable GAAP financial measures for non-GAAP measures, if available, may be found in today's press release, which is available on our website. The content of this conference call contains time-sensitive information accurate only as of the date of this live broadcast, November 5, 2025.

Except as required by law, Establishment Labs undertakes no obligation to revise or otherwise update any statement to reflect events or circumstances after the date of this call.

With that, it's my pleasure to turn the call over to Peter.

Good morning to everyone and thank you for joining today. Q3 2025 was a standout quarter for Establishment Labs. We grew global revenue 34% with the total revenue of $53.8 million, including $11.9 million in the U.S. We also exceeded 70% gross profit margin for the first time, coming in at 70.1%, and we achieved the first quarter of positive EBITDA in our company's history with $1.2 million in Q3.

Getting to positive EBITDA ahead of the fourth quarter was an important goal for our company, and we now turn our focus towards reaching cash flow positive next year. While optimizing our business, we had meaningful revenue growth in the U.S. and our other direct markets. I'd like to thank all the employees that made this a priority and a reality and the sense of accomplishment has all our employees eager for our next milestone of cash flow positive.

The U.S. business is our most important growth segment right now, and it continues to outperform. Q3 revenue was $11.9 million, up 16% sequentially in what is a seasonally slower quarter in breast procedures. Markets can be down 20% to 30% sequentially in Q3, making our results all the more impressive. For the first three quarters, U.S. revenue totaled $28.3 million, so we are clearly going to do quite a bit better than the $40 million we committed to last quarter.

We are expecting considerable acceleration of the U.S. business in Q4, and we are already seeing a significant shift from Q3. But as it's our first full Q4, we are going to be prudent by raising our 2025 revenue guidance to exceed $210 million, where we previously had a range of $208 million to $212 million. Most interesting is what these results imply for 2026 because we should finish 2025 at an approximate 20% share in U.S. breast augmentation market and the momentum has not slowed.

While 2026 will be a continuation of our growth in the breast augmentation segment, we are looking forward to our approval in breast reconstruction, which is a similar in market size to augmentation, and we are preparing for the U.S. launch in this segment. Outside the U.S., we saw good growth and remain on track for single-digit growth this year. Accelerating growth in our direct markets has been a priority, and we are seeing the benefits of the changes we have implemented.

Excluding the benefit of currency and the acquisition of our Benelux distributor, our European direct market sales increased approximately 20% this quarter over Q3 2024. In our distributor markets, Asia-Pac had a strong rebound from the second quarter as the ordering cadence normalized. Our U.S. business is performing at a very high level. The number of surgeons using Motiva continues to increase.

We now have over 1,300 surgeons using Motiva, including some of the highest volume and best-known practices in the country, and we are attracting additional waves of adopters as the benefits of Motiva in both clinical and commercial practice resonate. We are as focused on surgeons making Motiva their primary implant of choice as we are at attracting new surgeons to our business. We continue to bring groups of surgeons down to Costa Rica for training and surgery. Over 50 surgeons attended our September and October classes and more than 250 surgeons have come to Costa Rica since launch.

We are expecting a similar pace in 2026 with 7 sessions already scheduled, there is no shortage of surgeons that want to make the trip. Surgeons learn about the science behind our implant technology, see the best-in-class standards employed throughout our facilities and experience our commitment to driving innovation in the category, including discussing and offering input to our R&D pipeline.

While some surgeons come already enthused about Establishment Labs, almost every surgeon returns to their practice as a fan of our company. Social media continues to play an important role as plastic surgeons advocate Motiva to their audiences. Plastic surgeons consistently tell us that if they offer patients a choice between Motiva and legacy implants, it's almost unanimous that patients will choose Motiva.

This puts us in a position of strength, and we win if we convince plastic surgeons to give patients a choice. Every legacy brand has a much more challenging proposition. They have to convince plastic surgeons to offer only their products. Championing women's health and advocating for patients' choice should accelerate us to take a majority of the U.S. market over the next several years.

In Q3, we conducted a survey of surgeons that are early adopters and advocates of Motiva to understand the impact of Motiva on their practices. While industry sources point to a market that has not experienced much growth, the practices offering Motiva in our survey increased their procedures by 14.6% so far this year. Surgeons tell us that patients are coming in and asking for Motiva by name, and we hear from surgeons as well that many women are entering the category because of Motiva.

We regularly hear that women are abandoning their warranty of their legacy implants and choosing to pay out of pocket for Motiva. As many of you know, this is incredibly rare in healthcare, but it's happening now as our entry is changing the industry. There isn't just one single reason for this. Some women cite the improved safety profile offered by Motiva and others cite the benefits of having an above-the-muscle procedure without compromise.

And yet for others, it's the increased awareness from our marketing efforts. Whatever the reason, it's clear the conversation around breast augmentation is changing. This is a powerful combination. We are not only capturing share, but we are expanding and accelerating the market for breast augmentation. A major driver for market expansion is our minimally invasive portfolio.

As we have noted, we trained a group of U.S. plastic surgeons in July as part of our early experience group for Preserve to gain insights prior to going to market more broadly. Preserve is a breast tissue-preserving procedure that can be done without the need for general anesthesia, offering smaller scars and fast recovery. Preserve can be used in a wide cross-section of cases surgeons see in their day-to-day practices.

As these surgeons have taken Preserve back to their practices and started to perform procedures, the feedback has been very positive, not only from surgeons, but also from the women who have received the procedures. I encourage you to seek out the videos and testimonials that have been posted on our social media to see the early responses.

Surgeons have embraced the fundamental changes Preserve brings to breast augmentation. It is not just a new way to do an existing procedure. It is an entirely new concept in how a breast procedure can be done. Preserve has the potential to drive category growth and improve the economics for surgeons. We are seeing as much as a 40% price premium to a standard breast augmentation for these early experienced surgeons.

The group of surgeons that came for Preserve training where each supplied a small number of kits in August. A majority of the kits we provided have been used and surgeons consistently ask us for more to alleviate growing waitlist. From just our early experience launch, we would estimate that 300 Preserve cases have been performed in the U.S., and there are at least 100 women on waitlist around the country.

Not expectedly, there is a groundswell of surgeons that have asked to be trained on Preserve, and we will begin these trainings in January. We have two such trainings planned for the first quarter alone and would expect a similar cadence throughout the year. In breast reconstruction, our Flora Tissue Expander is now in use at over 150 hospitals in the United States. This bodes well for our expected launch into reconstruction, and we remain on track to file our PMA supplement by the end of the year.

We also remain on track for the approval of our small sizes in the U.S. in early 2026, and this should help accelerate growth both with new doctors as well as increasing the usage of our current doctors. Outside the U.S., excluding the benefit of our Benelux acquisition and currency, direct markets globally grew 15% versus last year. We believe this performance is well above the underlying market growth rates in these regions.

In our Latin American direct markets, we continue to see stabilization in Brazil and strong growth in Argentina. European direct markets are being led by strong performances across the continent with standouts in the UK and Spain. The number of accounts in many of our direct countries continues to increase, a positive sign and a reflection of the increased focus on performance in direct markets.

We are taking advantage of our strong growth in direct markets to make sure that the O-U.S. business as a whole is prime for growth. We are engaging with our distributor partners regularly. We are working to raise standards globally around payment terms, inventory forecast and market share expectations. In our minimally invasive portfolio, Mia remains on track to achieve $8 million to $10 million in revenue in 2025, and Preserve continues to see good adoption in international markets.

Surgeons globally are seeing the benefits of breast tissue preservation made possible by our minimally invasive platform. The successful rollout of Preserve and the continued growth of Mia has resulted in above-market growth and proves its potential for market expansion. Globally, we expect the portfolio of Mia and Preserve will exceed $30 million in 2026.

I will now turn the call over to Raj.

Thank you, Peter. Total revenue for the third quarter was $53.8 million, an increase of 33.7% from last year. Excluding the positive impact of foreign exchange in the quarter, growth would have been approximately 31.4%. Sales for Motiva in the United States were $11.9 million. On a geographic basis, sales in Europe, Middle East and Africa were 35.6% of the global total.

We saw strong sales in our direct markets in the region, while sales to distributors were lower on the timing of orders. Sales in the United States were 22.1% of the global total. Latin America was 21.7% of sales. Brazil remained stable, and we saw strong growth in our other direct market in the region, Argentina, as well as from our distributors. Asia-Pacific was 20.6% of sales.

Results in the quarter rebounded sharply from last quarter as expected orders from our distributors were realized. Sequential growth in the region was 46%. Our gross profit for the third quarter was $37.7 million or 70.1% of revenue, a 620 basis point increase compared to 63.9% of revenue last year and 130 basis points higher than the 68.8% in the second quarter of this year. This is the first time we have crossed 70% gross margin, and the increase is primarily the result of the higher margin sales in the United States.

We expect gross margins in 2025 will be approximately 300 basis points higher than in 2024. As it relates to tariffs, goods imported from Costa Rica to the United States are subject to duties. However, as we saw in 3Q, we are managing their impact and do not meaningfully change our trajectory for gross margin improvements this year. SG&A expenses of $37.2 million were approximately $3.1 million higher than the third quarter of 2024.

R&D expenses for the third quarter were $4.6 million. Total operating expenses for the third quarter increased approximately $2.9 million from the year-ago period to $41.7 million. Operating expenses have been approximately $45 million to $46 million on average per quarter, which is what we guided to at the start of the year and what we continue to expect.

As we saw in this quarter and in the second quarter, there can be fluctuations based on the timing of expenses. Adjusted EBITDA was positive $1.2 million in the third quarter. This compared to a loss of $8.5 million in the second quarter and $12.1 million in the first quarter. This is our first EBITDA-positive quarter as a company, and there are a couple of things to highlight.

While the improvement results are being supported by the strong sales and the higher gross profit in the United States, we have been very focused on managing our operating expenses. While operating expenses in the third quarter increased approximately $3 million from a year ago, they were down over $5 million from the third quarter of 2023. Over the time, we have invested significantly in our U.S. commercial operation and launched our minimally invasive portfolio.

We were able to do this by finding efficiencies across all parts of the organization and making structural changes where needed. We expect EBITDA will continue to improve, including in the fourth quarter and expect to remain EBITDA positive from here on. For 2026, we will continue to expand our commercial infrastructure in the United States. However, the investments we make overall as a company will be at a rate well below expected top line growth.

We've been investing with the expectation of global market leadership and have built an organization that can take full financial and commercial advantage as that occurs. Most of our spending in this regard has already happened. For example, the facilities we have today can produce more than half the world's implants. We expect revenue to grow more than 20% for at least several more years, and our business should start to show meaningful and increasing earnings in 2027 and beyond.

Cash increased $16 million in the third quarter to $70.6 million from $54.6 million at the end of the second quarter. The increase was primarily the result of drawing the remaining $25 million tranche of our credit facility, offset by our operating cash use. Excluding the net proceeds, cash use would have been $8.5 million in the third quarter. This compares to $14.5 million in the second quarter and $21.2 million in the first quarter.

We expect cash use to improve further in the fourth quarter and expect to reach cash flow positive in 2026 without the need for any further equity raises. Our credit facility [indiscernible] last year of its term in April, and we are considering a number of refinancing options that could further reduce our cash use. We're also working to make ESTA eligible for inclusion in a number of indices, most notably the Russell.

There are a number of things we can do to affect this, and we believe we will be eligible for future rebalancings. As Peter noted, we now expect our revenue in 2025 will exceed $210 million, an upward revision from our previous guidance of $208 million to $212 million. Our updated outlook represents growth of at least 26%. The U.S. remains a primary engine of growth this year.

We have seen very strong results over the first three quarters of 2025, and this has continued into the fourth quarter. Our direct markets outside the U.S. are also doing well and demand globally for our products remains good. Gross margins are improving, and we are managing our operating expenses, which allowed us to achieve positive EBITDA a quarter early. We expect to see continued improvements in profitability and remain confident we'll reach cash flow positive in 2026.

I will now turn the call back to Peter.

Third quarter of 2025 was in many ways, a turning point for our company. We achieved positive EBITDA for the first time, and we achieved this in a quarter where we grew revenue 34%. These results show that we can efficiently invest in and grow our business, and we will continue to do so.

The next step is to achieve cash flow positive, which I am confident we will do next year. We expect our top line growth to remain above 20% for the next several years, and our profitability should expand at a much faster pace. I am looking forward to having conversations with our shareholders about our increasing EPS and how we can keep that momentum going for the next 5 to 10 years.

Operator, we're ready to take questions.

[Operator Instructions] The first question comes from Anthony Petrone with Mizuho.

Congrats to the team all around here on strong execution. Maybe Pete and Raj, you could start with the comments on 2025 and just the implied outlook as we head into the end of the year. Just looking for some more inputs, puts and takes on the 4Q number, specifically, how should we think about O-U.S. trends?

Obviously, there's strong momentum on the U.S. side, but maybe a little bit more detail on what we're thinking about for new account openings from here, Preserve uptake? And then lastly, just the EBITDA-positive, well ahead of expectations. How do you think about EBITDA trending from here just given the momentum on the U.S. side?

Yeah. Thanks for the question, Anthony. Clearly, a lot of momentum in the business heading into the fourth quarter. And as we noted, we're planning to exceed $210 million now for the year. And as it relates to the fourth quarter, the U.S. has quickly become our largest market, and we have a lot of momentum in the U.S. For us, though, we haven't yet seen a fourth quarter, right?

And there are some nuances in the fourth quarter around reconstruction and some of the holidays and things. And so we just want to be prudent in terms of how we set the midpoint for the fourth quarter. But clearly, we have a lot of momentum, and we expect to meaningfully exceed the $40 million we previously provided. And so the U.S. is doing very well.

Outside the U.S., we also have a lot of momentum, specifically in direct markets where we're seeing very strong growth. In Europe, we were north of 20% in direct markets this quarter. We have a really strong order book for the fourth quarter from our distributors. And so we're expecting a very strong finish to the year. And I think importantly, that sets us up really well for 2026, right?

The momentum we're carrying in the business that will play forward in next year really is a nice place to be as we're entering the new year. As it relates to EBITDA, again, we're all very proud of what we've achieved here a quarter early, the $1.2 million. But as we also noted, it's just the beginning here, right?

We have a lot of leverage we can still bring to this business as we're investing, and you'll see EBITDA continue to expand in the fourth quarter, and we expect to continue to show nice improvement overall in 2026. And so I think the business, again, has a lot of momentum. You're starting to see the profitability and the leverage in the model, and we expect that's going to continue from here forward.

The next question comes from Josh Jennings with TD Cowen.

Congratulations on arriving in the EBITDA positive era a little bit earlier than expected. Pete and Raj, I was hoping to just start on thinking about 2026 and the international business, but specifically China. Any updates just in terms of the outlook there and the distributor relationships and when reordering could start to kick in? Should we be expecting Q1 2026? Is there any chance that there could be some China orders in the fourth quarter?

Yes. So thank you, Josh. In terms of the O-U.S. markets, I think in general, we've seen stabilization for the most part across all the markets. Our focus going into this year, Josh, was really driving growth in our direct markets. And I think we've been very successful in doing that. We have better economics. We have more upside potential in those markets.

And as Raj mentioned, we had 20% growth, and that's following a quarter where we had 27% growth in our European markets. So we're [ gaining ] accounts. A lot of that growth is being fueled by Preserve, but very strong performance, and we're going to continue to focus on that going into 2026. And we see good momentum in the fourth quarter, and that's just going to continue into next year.

Yeah, as it relates to China, I think we're working very closely with our partners there. We've actually seen some good progress, especially from a sell-out standpoint, and we're going to continue to work closely with them, and we're going to keep you updated, but we want to make sure we build the business there the right way.

The next question comes from Allen Gong with JPMorgan.

I have one on the broader market. When we look to some of your peers in aesthetics, I think some of the body language we were getting from them was definitely a bit more cautious on market dynamics, especially heading into fourth quarter, looking at your results and listening to your confidence, definitely sounds like you're not seeing that -- so I guess, are you not seeing that weakness? Are you just growing through it or is there a reason why those challenges are more company-specific than for the broader market?

Yeah. Thanks. First off, I mean, we can't really comment on their perspective in terms of the market. I can just tell you how we're seeing the market in the U.S. specific to breast aesthetics. I think we've created a lot of momentum in the marketplace.

And I think what we mentioned in the prepared remarks in some of the accounts that have early adopters of Motiva, we're seeing an increase in the number of procedures. So what we are seeing and as it relates to our business, we're seeing growth. We're very positive in terms of the momentum we've been able to build in the Q4, and that's just going to continue into next year.

The next question comes from Sam Eiber with BTIG.

Maybe I can shift over to the minimally invasive platforms. You talked about the $30 million in revenue for next year. Can you just maybe help frame contribution this year, if there's any way to parse out Mia versus Preserve? And then what market development work needs to happen to get to those -- the at least $30 million target for next year?

Yeah. Thanks, Sam. We're -- I mean, we're very, very happy with the progress we're making with Preserve and the minimally invasive platform. Speaking specifically on Mia, we've doubled the number of accounts this year, and that was our goal. And then with Preserve, we're off to an outstanding start in Europe, and we're really focusing primarily on the direct markets, but we're also expanding it to some of our distributor markets.

And that momentum is going to continue into 2026. We mentioned also that in the U.S., we're going to be launching early part of next year. So we're looking at the end of the first quarter. There's already significant demand. We've seen that with the early experienced surgeons. They're very excited. And I think once it's launched, I think it's going to be a pretty quick ramp-up. So we're very pleased with that platform and how it's performing.

The next question comes from Joanne Wuensch with Citi.

This is [ Anthony ] filling in for Joanne. Is there any chance you could provide -- either quantify or maybe provide a little bit more granularity around your expectation to -- for U.S. sales to meaningfully exceed $40 million this year?

Yeah, Anthony, as I tried to answer the first question, right, the fourth quarter, again, is we have -- we're carrying a lot of momentum into the fourth quarter, right? And so we will do quite a bit better than the $40 million we previously talked about. However, it is the first time we've had a fourth quarter in the United States, right?

And so there is some holidays, some other elements to the quarter that make it difficult to kind of tell you exactly where we're going to land. And so again, it's a difficult question, but I think the reality is we're doing very well in the U.S., the number of accounts, the orders we're getting, all of it is really pushing in the right direction, and we just -- we think we have a lot of momentum that we're carrying right now.

The next question comes from Mason Carrico with Stephens.

So reiterating the single-digit growth in international revenue, it seems like you're seeing strength across a handful of markets, stability in others. Are you willing to quantify how at least preliminarily you're thinking about growth in the international market next year?

Yeah. I think, Mason, it's a good question, right? We haven't yet provided the 2026 outlook. But from a high-level standpoint, we're seeing very good demand in our direct markets. It's been an area of focus for us. We spent a lot of time making sure we have the right team there, the right structure there.

And you are seeing that play out now, and we don't expect that momentum will slow. And so that is going to carry us into 2026. The other part of the business is distributors. We don't have perfect visibility into how the distributor markets are doing. But generally, the tone in those markets remains very good. The end markets seem very similar to what we're seeing in our direct markets.

And so overall, we're expecting in 2026, our international markets will perform well. And then you marry that with what we're seeing in the United States, and we commented that we expect to finish it at approximately 20%, which provides a very good stepping off point in the U.S. for 2026. And overall, we're expecting another year of very strong growth for the company.

Got it. Okay. And in terms of Motiva accounts in the U.S., what are you guys seeing in terms of trends among customers after adoption? How quickly are you seeing them ramp up? Is there an average amount of their practice they end up converting? Just any incremental detail you can provide there?

Yeah. I think as we mentioned before, I mean, the growth in the U.S. is really exceeding all our expectations. We've kind of overdelivered on most of the internal KPIs that we have. So we're very pleased with that. We continue to add additional accounts. The utilization rate continues to pick up, especially as a lot of the accounts are going through their scheduling process.

What also helps quite a bit in terms of the utilization and also the penetration is the number of patients that are entering the accounts asking specifically for Motiva. So we're seeing a really good growth in the Q4, and it's somewhat of an inflection point for us, and we believe that momentum will finish this year, and then it's going to continue to grow next year, especially when we start layering over some of the Preserve launch, also the small sizes as well.

The next question comes from Mike Matson with Needham & Company.

So I wanted to get some clarification on the commentary around getting to 20% share exiting the year. So we had estimated that the U.S. market -- augmentation market is around $600 million, so about $150 million a quarter, if you flatline it and 20% of that would sort of imply about $30 million.

I mean, is that math reasonable or am I missing something? Maybe you mean like as of the very last day of the quarter, you'll be ramping through the quarter, you'll be at 20% as of the very tail end of the quarter or something like that?

Yeah, Mike, I think just to level set, I think your expectation for the size of the market may be a little bit off. If you look at some of the data from the clinical societies, the market in the United States is estimated at approximately 300,000 procedures a year. Our ASPs, we've talked about are around $1,300, a little north of $1,300 per case.

That puts you at a little bit below $400 million for the augmentation market. The reconstruction market is a market about that same size, right? So if you just think about the augmentation market, you're looking at a market closer to $390 million, $400 million in that range. And that is the market against which we expect to exit at about 20%.

Okay. So more like a $20 million number then.

But again, that's also an exit rate, right, as we're leaving 2025 and '26.

Okay. All right, understand. And then just as far as the fourth quarter goes, how much visibility do you feel you have? I mean we're over a month into the quarter now or I guess, sorry, two months into the quarter now. And then I know you have orders that you get. And so I don't know how much lead time there is between an order and a shipment and things like that, but.

We do. I mean we do see the daily orders, right? We know the number of customers we have. And so we have very -- we have quite a bit of visibility on how the business is tracking. And as we've noted, there's a lot of momentum right now. Those metrics all continue to go higher. And as we're leaving the third quarter and we've entered the fourth quarter here moving out of that seasonally slow period, there's a lot of acceleration in this business.

Again, it's our first fourth quarter as a company in the United States. And so we just want to be prudent in terms of where we set the midpoint of where we think we end up. But you shouldn't think that there's anything behind that, right? The business is doing extremely well, and we're going to have a very strong finish to the year.

The next question comes from Matthew Taylor with Jefferies.

This is [ Matt ] on for Matt Taylor. I just wanted to ask a quick question on 2026. And assuming you're exiting 2025 with around 20% market share, looking at your kind of strategy into next year, do you anticipate driving your expansion primarily through penetration with these existing accounts or is it mainly blocking and tackling going after new accounts?

Yeah. So I mean, as we mentioned before, I mean, we're exiting 2025 with tremendous momentum. We keep on adding existing accounts or adding accounts, the utilization rate continues to pick up. And that momentum is going to continue into next year. Now what we're also doing is we -- and we mentioned this on the previous call, we're going to be adding additional reps up to about 15 reps for next year.

And that will help increase the utilization, also the reach in some of those accounts that we can add into next year. We're also going to be launching Preserve at the end of the first quarter, and then we also have the launch of the small size, which we anticipate at the beginning of next year.

So I think you're going to see a combination of continued growth in the accounts that we are in and as we continue to increase the utilization rate, we're going to be adding additional accounts. And then you also have with the expansion in terms of filling out our matrix as well as with the Preserve launch. So I think you're going to see a combination of both.

Okay. That's helpful. So I'd say like looking at your 5-year plan, you're still fairly confident in kind of reaching that goal of, I don't know, 40% to 70% that you've seen in other markets. Is that fair to assume?

Yes. Yes.

Thank you. This is all the time we have for questions today. I will now turn the call back over to Peter Caldini for closing remarks.

Okay. Thank you, everybody, for joining. Look forward to the next call and thank you very much for attending.

This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation and have a great day.