Establishment Labs (ESTA) Earnings Transcript

Image source: The Motley Fool.

Date

Tuesday, Feb. 24, 2026, 8:30 a.m. ET

Call participants

• Chief Executive Officer — Peter Caldini
• Chief Financial Officer — Rajbir Singh Denhoy
• Incoming Chief Financial Officer — Cassandra Harris

Need a quote from a Motley Fool analyst? Email pr@fool.com

Takeaways

• Total revenue -- $64.6 million, up 45.2% year over year, with $17.3 million from Motiva sales in the U.S.
• Full-year revenue -- $211.1 million, representing 27.2% annual growth.
• Gross profit margin -- 70.5% in Q4, 200 basis points higher than the previous year, with fiscal year 2025 margin increasing 330 basis points, mainly due to higher-margin U.S. sales.
• U.S. Motiva sales -- $45.6 million in 2025, achieving roughly 20% augmentation market share upon exit of the year and described as “something that took the last new entrant almost ten years to achieve.”
• Net loss from operations -- $(3.9 million) in Q4, down 79% year over year.
• Adjusted EBITDA -- $5.5 million positive in Q4, compared to $(13,100,000) loss last year.
• SG&A expenses -- $44 million in Q4, flat year over year.
• R&D expenses -- $5.4 million in Q4, supporting continued product innovation.
• Cash balance -- Ended 2025 with $75.6 million after a $4.9 million quarterly increase, driven by lower operating cash use and option exercises.
• 2026 revenue guidance -- $264 million to $266 million (25.1%-26% growth), with the U.S. projected to contribute over 30% of total sales.
• 2026 OUS (Outside U.S.) growth -- Global business outside the U.S. expected to grow at a single-digit rate.
• Gross margin outlook -- Guidance for a 200- to 300-basis point decrease for 2026.
• Operating expenses guidance -- $195 million to $200 million for 2026, with underlying cash expenses of $175 million to $180 million.
• Adjusted EBITDA forecast -- Positive every quarter in 2026, projecting continued improvement in profitability.
• Cash flow guidance -- Management expects to achieve positive cash flow in 2026 without additional capital required; free cash use to be less than half of 2025 levels.
• Sales force expansion -- Up to 15 additional U.S. sales representatives planned for 2026, with most hires completed; majority are seasoned industry professionals.
• Account penetration -- Over 1,500 U.S. accounts onboarded since launch, with both January and February [of 2026] exceeding expectations and further account growth expected throughout the year.
• Preserva launch -- Full commercial U.S. launch in March 2026 after strong early experience; average Preserva procedure earning over twice traditional revenue and priced at a premium, with surgeons charging 30%-50% more than standard augmentation.
• Preserva user data -- 81% of U.S. prelaunch organic leads reported Preserva as their exclusive interest; 15% of patients would not have pursued augmentation without Preserva.
• Minimally invasive platform -- Preserva now available in 33 global markets, with over 700 accounts opened and 200 U.S. surgeons expected to be trained by year-end.
• Minimally invasive platform guidance -- Forecasted to exceed $30 million in global demand for 2026.
• Geographic revenue breakdown (Q4) -- EMEA 41%, U.S. 26.8%, Latin America 18%, APAC 14.1% of global sales.
• Direct market growth -- European direct markets delivered greater than 20% sales growth for the third straight quarter, led by the U.K., Germany, and Spain.
• Mia -- Outperformed $8 million-$10 million guidance and doubled account base versus 2024.
• FDA filings -- Submitted Motiva Implants for U.S. approval in primary and revision breast reconstruction in December 2025; Motiva Flora Breast Tissue Expander in 200 facilities nationwide.
• Management transition -- New CFO Cassandra Harris appointed effective March 9, 2026; Rajbir Singh Denhoy transitioning to SVP, Global Strategy.
• Index inclusion efforts -- Work ongoing for eligibility and likely inclusion in indices such as the Russell within the year.

Summary

Establishment Labs (NASDAQ:ESTA) recorded an acceleration in top-line growth, achieving 45.2% year-over-year revenue expansion in the fourth quarter largely driven by rapid U.S. adoption and robust margin performance. The company maintained cost discipline, keeping SG&A flat and limiting cash operating expense expansion below revenue growth, leading to significant improvement in net loss and a shift to positive adjusted EBITDA for two consecutive quarters. Strategic guidance for 2026 projects top-line growth in the mid-20% range, with a step-up in U.S. revenue contribution and sustained OUS momentum, while operational leverage and commercial execution remain focal points. Pipeline initiatives, including the full U.S. commercial launch of Preserva and FDA filings for reconstruction and new product sizes, position Establishment Labs Holdings to drive higher pricing, broaden its addressable market, and reinforce share gains. Leadership changes, including a new CFO and the elevation of Rajbir Singh Denhoy to SVP, Global Strategy, mark the company's focus on scalability and execution as it enters its next growth phase.

• The management team cited “no need for additional capital” and forecast positive cash flow by year-end 2026 based on current visibility and cash balances.
• Preserva’s high ASP and appeal to previously untapped patient segments could provide both dollar market expansion and a lift in procedure volumes, with “at least 200” U.S. surgeons to be trained by year-end.
• Motiva achieved a “roughly 20% augmentation market share” in the U.S. by the end of its first full year, a pace of market entry described by management as unprecedented in the sector.
• Guidance does not factor in revenue from U.S. reconstruction or small sizes approvals for 2026; material impact is expected to follow upon anticipated FDA clearance.
• Efficiencies in cost structure, along with pricing from innovations like Preserva and a favorable mix shift, are expected to drive further margin expansion in 2027 and beyond.
• Management emphasized active preparation for potential inclusion in benchmark indices, which may influence capital market positioning in the coming year.

Industry Glossary

• OUS: "Outside the United States," referring to business operations and financial metrics from markets beyond the U.S.
• Preserva: A proprietary minimally invasive breast augmentation procedure platform from Establishment Labs Holdings, designed for smaller incisions, minimal anesthesia, faster recovery, and premium pricing.
• Motiva Flora Breast Tissue Expander: An implantable device aiding in breast reconstruction by stretching tissue in preparation for permanent implants.
• Mia: Establishment Labs Holdings’ product family for minimally invasive breast enhancement, targeted for global markets.
• ASP: Average Selling Price, a metric for the revenue received per item sold, particularly relevant as Establishment Labs Holdings launches higher-priced innovations.

Full Conference Call Transcript

Rajbir Singh Denhoy: 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 will 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 Holdings Inc.'s financial outlook and the company's plans and timing for product development and sales. These forward-looking statements are based on management's current views 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, we 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 establishmentlabs.com. I would 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 may 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, 02/24/2026. Except as required by law, Establishment Labs Holdings Inc. undertakes no obligation to revise or otherwise update any statements 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 all for joining us today.

Peter Caldini: Q4 2025 was another standout quarter for Establishment Labs Holdings Inc. Fourth quarter revenue was $64,600,000, an increase of 45.2% versus Q4 2024, including Motiva revenue in the U.S. of $17,300,000. This brings our 2025 total revenue to $211,100,000, an increase of 27.2% over 2024. U.S. Motiva revenue in 2025 was $45,600,000, a number that I am sure significantly exceeded everyone's expectations. As our business scaled, the operational leverage that we have been talking about is coming into focus. Q4 had a exceeding 70% gross margin for the second consecutive quarter and our margins will continue to improve. Our fourth quarter net loss from operations was $3,900,000, down 79% from Q4 2024.

Our Q4 adjusted EBITDA was positive $5,500,000, up from the negative $13,100,000 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 margins should improve for years after that. With this trajectory, and our ending cash balance of $75,600,000 in 2025, we have no need for additional capital. As noted at the J.P. Morgan Healthcare Conference, we are comfortable not only setting guidance for 2026, but also providing some visibility into 2027. As such, we are giving guidance for 2026 of $264,000,000 to $266,000,000 and there may be some upsides to these numbers.

At a minimum, this is a 25% growth and we believe that in 2027, we will see at least this level of growth as well. Q4 capped off a remarkable 2025 for Establishment Labs Holdings Inc. We did not 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 $45,600,000 in U.S. revenue and approximate 20% augmentation market share exiting 2025 is something that took the last new entrant almost ten years to achieve. And we did it in one. How did we accomplish this?

Well, first off, there has been a complete lack of innovation in breast aesthetics for decades. We have had an active R&D pipeline since 2010 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, nine out of ten choose Motiva, even at a higher price point.

This is not 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 our 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 number one aesthetic surgical procedure annually.

But it has always been a secret shared quietly. Social media has created a new paradigm; 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 is new, it is differentiated, and they are taking to 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 rarely ask for a brand. All this has led to one of the fastest product launches in breast aesthetics history. The momentum has continued in 2026 with both January and 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 patient-driven demand and unmatched safety profile, the benefits of SmoothSilk surface, and the opportunity for above-the-muscle placement.

In the survey, 75% of surgeons noted they have 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 remains 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 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 fifteen 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 Preserva.

We had strong global demand and we are confident 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 two types of women choosing Preserva.

The first are women that are already committed to the idea of breast augmentation, but are now choosing Preserva at a much higher price point because of the benefits over traditional augmentation. The second are women that were simply not interested in the 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 Preserva website, website prelaunch, 81% of patients looking to get connected with a surgeon said they are only interested in getting a breast augmentation if they can get Preserva. This marks a meaningful paradigm shift in the industry with Motiva uniquely positioned as the only solution meeting evolving consumer interests. We charge about two times more for Preserva than we do for traditional breast augmentation. Preserva is not only expanding the market on a dollar basis, it is expanding procedure volumes as well. Based on our U.S. early experience, we are seeing expansion in the category.

Approximately 15% of Preserva 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 and have trained more than 90 surgeons, many of whom report patient waitlists and women traveling across the country to access the procedure. In a recent survey with consumers on Preserva, over 55% of patients considering breast augmentations indicated a willingness to pay a premium and surgeons are currently charging 30% to 50% more than traditional augmentation. The average breast augmentation in America is about $9,000 and currently, the average pricing for Preserva 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 are doing diligence around the impact that Preserva is having, I suggest talking to surgeons that have performed a number of cases. At least five surgeons have already done more than 40 cases in geographies that span coast to coast. Surgeons cite the benefits of Preserva to patients, but also to their practices. One plastic surgeon told me recently that Preserva 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 is able to do three or four more operations per week with the time that Preserva saves her. 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 sizes 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 are 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 markets 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 are actively working with the local distributor and seeing improved performance. Our minimally invasive platform Preserva and Mia continues to demonstrate strong momentum outside the United States. Preserva is now available in 33 global markets with demand exceeding expectations and more than 700 accounts opened. Mia outperformed the $8,000,000 to $10,000,000 guidance in 2025 and has more than doubled the number of accounts compared to 2024. Notably, all Mia clinics have adopted Preserva, 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 our minimally invasive platform to exceed $30,000,000 in 2026 and continue to be a key growth driver in years to come. As I am sure you have noted, we issued a second press release this morning around the management transition, making it effective March 9, which is really about getting Establishment Labs Holdings Inc. 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. 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.

Rajbir Singh Denhoy: Total revenue for the fourth quarter was $64,600,000, 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 for Motiva in the United States were $17,300,000. 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 the United States were 26.8% of the global total. Latin America was 18% of sales.

Brazil remained stable, and we saw good growth in Argentina, our 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 $45,500,000 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 $44,000,000 and were flat compared to 2024. R&D expenses for the fourth quarter were $5,400,000. Total operating expenses for the fourth quarter were in line with the year-ago period at $49,500,000. Adjusted EBITDA was positive $5,500,000 in the fourth quarter. This compared to a loss of $13,100,000 in the fourth quarter of last year. This is our second consecutive quarter of positive adjusted EBITDA. The $18,600,000 improvement year over year in adjusted EBITDA was driven by strong sales and the higher gross profit in the United States. But we have 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 a second offering on our minimally invasive portfolio. We were able to do this and still generate increasing profitability by finding efficiencies across all parts of the organization, making structural changes when needed. Cash increased $4,900,000 in the fourth quarter to $75,600,000. 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 $264,000,000 to $266,000,000, 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.

This is up from approximately 22% in 2025. Gross margins are expected to decrease 200 to 300 basis points. Operating expenses in total are expected to be approximately $195,000,000 to $200,000,000 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. We expect to reach cash flow positive this year without the need for any further equity raises.

Our credit facility went into the last year of its term in April, and we are considering a number of refinancing options. Overall, our financial outlook reflects the 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. Preserva will add to both procedure growth as well as our realized ASPs. Outside the U.S., global demand remains good, and our own direct markets and our minimally invasive portfolio should lead to another solid year of results. Down the P&L, gross margins are benefiting from the positive end-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 am moving into a new role at Establishment Labs Holdings Inc.

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 twenty years, and there are a number of areas that have the opportunity to be strengthened. After five years as CFO, I am looking forward to the new challenge of leading our global strategy.

In this new role, I remain actively engaged in driving our performance, but the day-to-day finance function and CFO role will transition to Cassandra Harris, who was selected after an extensive search. With that, I will turn the call back to Peter. Thank you, Raj.

Peter Caldini: 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 would 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 are ready to take your questions.

Operator: Thank you. We will now conduct a question-and-answer session. As a reminder, this conference is being recorded. The first question comes from Joshua Thomas Jennings with TD Cowen. Please proceed. Hi, good morning. Thanks for taking the questions and

Joshua Thomas Jennings: congratulations with the 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 Preserva 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 volumes, 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 from Establishment Labs Holdings Inc. coming through.

Peter Caldini: 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 are 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 were not considering it until they heard about Preserva, and that is in our early experience survey in the U.S.

So it is a real driver for 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 are really seeing that benefit. And we think that is going to continue to be a key driver. It is going to be a bigger part of our business as we go throughout this year as well as next. And our estimate, what we put in terms of the guidance, over $30,000,000 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.

Joshua Thomas Jennings: Excellent. Maybe just one follow-up. 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 are 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 the productivity can ramp for these new reps as they come on board over the course of 2026. Thanks for taking the question.

Peter Caldini: Yes. Thanks, Josh. I mean, I think one of the key drivers for our success in the U.S. market is we have been able to put together a best-in-class organization. So if you couple that with what we believe is the best product from a performance and a safety profile and bringing it together with the best-in-class organization. And we are very focused on the type of reps that we bring to Establishment Labs Holdings Inc. 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 is 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 this year as well as into the future.

Operator: The next question comes from Michael Matson with Needham & Company. Please proceed.

Michael Matson: Yes. Thanks for taking my question. 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 when you do get the FDA approval? Do you need specialist reps? Do you need maybe like a corporate accounts type sales team? And maybe just talk about the importance of hospital contracts there?

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

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

Michael Matson: 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, orders or anything like that? Or is this truly reflective of the underlying procedure growth that you are seeing?

Peter Caldini: Yes. I mean, I think, listen, this year, we made a very strategic focus on driving our direct markets. And we have really been successful in terms of driving growth in those markets. We have allocated resources from a supply as well as investment standpoint. We made some organizational changes and you are seeing the benefits of that. We have had 20% growth the last three quarters. Preserva is also helping to drive that. As well as we increased 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 do not think there was any necessarily any stocking orders.

It is just sometimes what you will find in the distributor markets, there are some different periods. It is not always a straight line. It is a little bit choppy in terms of that, but there were no efforts in terms of any type of additional inventory or stocking. It is just really based on the demand that we are getting in the marketplace. And it is also based on the good execution.

Michael Matson: Okay. Great.

Operator: The next question comes from Anthony Charles Petrone with Mizuho. Please proceed.

Anthony Charles Petrone: Thanks and congrats on a strong year. Congrats, Raj, on the transition. And Cassandra, welcome to the team, if you are 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 three-month to six-month basis here when you think of the regions. And maybe just a quick recap, where do you see the underlying markets, U.S. and then some of the core OUS markets, thinking of Europe, China, Korea? And then I will have a follow-up question.

Rajbir Singh Denhoy: Yes, Anthony. The question is really on the underlying markets. I mean, markets feel healthy right now. The U.S. for us, we are growing at a high rate. So we are kind of well exceeding what is happening in underlying markets. But as we have noted, there does seem to be some increased interest in breast augmentation procedures. And a lot of that has been driven by the activities we are doing, certainly, but it does feel like 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 would say the U.S. remains quite healthy. Internationally, frankly, we are seeing the same thing.

In our distributor markets, you have seen north of 20% growth now for several quarters. That again is pretty indicative of what is 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 have highlighted as having some challenges. It is taking a lot of focus of management in the company. We are spending a lot of time with that distributor. And frankly, we are seeing the results starting to turn a little bit. And so overall, I would say, you know, the markets remain healthy for us. And you can see the numbers.

Anthony Charles Petrone: That is helpful. And a follow-up would be on just the Establishment Labs Holdings Inc. mix. When you think of Preserva here coming in, and obviously, good feedback, but also reconstruction. What do you think, I guess, Preserva can be as a percent of total revenues once we get into the sort of 2027 to 2028 time range? You know, can it eventually be 50% of, let us say, U.S. revenues? And if that is the case, what do you think the tailwind looks like to your gross margin? Thanks.

Rajbir Singh Denhoy: Yes. I mean, Anthony, it is early still, right? So Preserva launched essentially a year ago in Brazil, this February 2025, right. And the demand we have seen has been very strong. The U.S., globally, there is a lot of interest that has really, I think, caught the attention of surgeons and 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 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 realize for a Preserva case relative to a case that only uses the implant, it is about twice the revenue to us as a company. And they are much higher margin. So it is a tailwind to what you are going to see on the gross margin side. That combined with the ASPs in the U.S., what is 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.

Operator: The next question comes from Sam Shimon Eiber with B. Please proceed. Hi, good morning. Thanks for taking the questions here. Maybe I can come back to the U.S. for just a second. Peter, 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, you know, is the long-term outlook for share gains still around the same goalposts that you have laid out in the past?

Peter Caldini: Yes. Thanks, Sam. We continue to have very strong momentum going into 2026. We, as I mentioned in the prepared remarks, there is a lot of opportunity to continue to gain share in the accounts that we are already in as we increase the utilization rate as the surgeons work through their scheduling. We are also going to be continuing to add accounts, so put more accounts on the top of the funnel. So that is going to be significant drivers for us. As we mentioned also, we are 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 are going to start that process at the end of last year. So we have had close to 10 reps join the organization so far. And we are going to continue to bring those reps. So that is the key driver for us. Then you overlay the fact that we are going to be launching Preserva. And the performance that we have seen outside the U.S., but also in terms of the early experience, it is creating a lot of excitement in the U.S. market. So that will continue to be a key driver for us. And in 2026, we also are expecting to get the smaller sizes approved.

In the first half of this year, depending on the FDA, but we are very confident we should have that in the first half of the year. And that is 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 Ergo 2, which will enable us to EMEA to the marketplace. So our plan is still the same. We plan to be a dominant share in the U.S. market. We are on that path to get there.

And I think that is probably going to happen a little bit sooner than I think we originally planned, just based on the strong momentum we have had so far.

Rajbir Singh Denhoy: Yes. Sam, if you look at the guidance we have given for the U.S. for it to exceed 30% of our sales, it is almost a third of our sales will be coming from the U.S., if not more, in the second full year. So we have got a lot of momentum in the U.S. that is going very, very well.

Operator: The next question comes from Allen Gong with J.P. Morgan. Please proceed.

Allen Gong: Thanks for the question. You touched upon it already in response to some other questions, but I am just curious about the contribution you are currently factoring into the 2026 guide from some of the, you know, pipeline products you have between small sizes and reconstruction. Is reconstruction 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 have mentioned, you are already seeded in around 200 hospital facilities?

Rajbir Singh Denhoy: Yes. So on reconstruction, it is likely a 2027 and 2028 and beyond story for us, right? Because obviously, it is still with the FDA. We, nothing has changed our opinion 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 have already done is we have seen strong interest from hospitals already. We are already in a number of them. And there is a lot of interest in recon getting to market and getting in the hands of a lot more surgeons.

Peter Caldini: Yes. Allen, just to add to that, as Raj highlighted, the recon, our expectation is that where we are going to see the impact is in 2027. So we are not really considering that for 2026. And also as you look at Preserva, I think we see a tremendous upside in those numbers. And I think we have been very pleased with the initial results 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.

Allen Gong: Got it. And then just a quick follow-up on spend. You know, when we look at 2024, we saw a pretty linear increase in spend out of the start of the U.S. launch. This year was a little bit bumpier. Talking specifically about SG&A, and it sounds like you have already put in a good amount of investment into the U.S. salesforce expansion you previously talked about early on in the year. So just any color on the cadence of, you know, 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. Thank you so much.

Rajbir Singh Denhoy: Yeah. I think your question is a good one. I mean, you look at the overall spending for us, we have talked about $195,000,000 to $200,000,000. But if one excludes out non-cash expenses and one-time things, that is $175,000,000 to $180,000,000 cash operating expenses, which compares to a number roughly $160,000,000 or so, right? So the increase is well below the $50-plus million of revenue expansion we are going to see this year, right? So we are starting to see the significant leverage in the model playing out. And that is going to continue in 2027 and beyond. Even the incremental investment to support the recon market will be well below the opportunity that represents.

And so again, that is 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. The first quarter will actually likely be a little below trend and then it will pick up in the back half of the year. But we are supporting a lot of U.S. expansion early on, and then it will continue to be leveraged over the course of the year. But it is 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 and the back half.

Operator: The next question comes from Caitlin Roberts with Canaccord. Please proceed.

Caitlin Roberts: Hi, thanks for taking the questions and congrats on all the new roles 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.?

Rajbir Singh Denhoy: It is 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 is usually a down quarter for the market overall. And then you will see kind of continued step-ups every quarter with a very strong finish to the year in the U.S. Again, normal seasonality. Internationally, it is a bit more normalized because you are not quite growing at the same rate you are in the United States.

And so overall, it is going to be that similar pattern with the first quarter is down, you see a pickup in the second quarter, it is down a little bit in the third quarter, and see a very strong finish to the year. But you do have the subtlety of what is happening in the U.S. with the very strong growth we are seeing overall.

Caitlin Roberts: Great, thanks. 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?

Rajbir Singh Denhoy: It is 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 has 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 is hard to get exact numbers on penetration, we are still quite low in a number of markets. And that is based primarily on the timing of when these accounts came on, right?

So an account that has been with us for six months or less is going to be lower than one that has 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 is what is really going to drive the results. There is a lot of potential there. We are still early in a lot of the customers we signed up over the back half of last year.

Peter Caldini: Yes. Caitlin, just to add, that is 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 have really seen a strong push where Motiva is a majority, if not almost all, of their volume. It is really now then the next phase to really enhance that penetration and that is a big focus for us. I think there is a lot of opportunity in that area. I think in certain accounts we are underdeveloped. Now granted that is 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.

Caitlin Roberts: Awesome. Thanks so much.

Operator: The next question comes from Mason Owen Carrico with Stephens. Please proceed.

Mason Owen Carrico: Hey guys. Thanks for the questions here. 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, you know, a future year.

Peter Caldini: Yes, thanks. As we mentioned in the prepared remarks and we have 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 have been very pleased over the last six months in the back half of the year that we are 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. And we expect to have the same type of dominant share in China that we do throughout the rest of Asia.

Mason Owen Carrico: Got it. Okay. And with the launch of Preserva this year, it seems like ASPs in the U.S. 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?

Rajbir Singh Denhoy: Yes. I think, Mason, we are 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 is how you describe it, right? So continue to take share, procedure volume, that is what is going to drive the revenue. Preserva is certainly going to contribute. We are 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 is still primarily about penetration into this market and taking share from the incumbents.

Mason Owen Carrico: Got it. Thanks, guys.

Operator: 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.

Peter Caldini: Thank you, operator, thank you, everybody, for joining the call today. We have made tremendous progress over the last twelve months. I think we are in a very good position to really capitalize, I think, on the unique opportunity and the strengths that we have, especially around our product 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.

Operator: 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.

This article is a transcript of this conference call produced for The Motley Fool. While we strive for our Foolish Best, there may be errors, omissions, or inaccuracies in this transcript. Parts of this article were created using Large Language Models (LLMs) based on The Motley Fool's insights and investing approach. It has been reviewed by our AI quality control systems. Since LLMs cannot (currently) own stocks, it has no positions in any of the stocks mentioned. As with all our articles, The Motley Fool does not assume any responsibility for your use of this content, and we strongly encourage you to do your own research, including listening to the call yourself and reading the company's SEC filings. Please see our Terms and Conditions for additional details, including our Obligatory Capitalized Disclaimers of Liability.

The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.