Establishment Labs Holdings ((ESTA)) has held its Q2 earnings call. Read on for the main highlights of the call.
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The recent earnings call for Establishment Labs Holdings painted a picture of optimism tempered by challenges. The company reported strong revenue growth, particularly in the U.S. and European markets, alongside improved operating profitability. However, these positive developments were offset by difficulties in the Chinese market, increased operating expenses, and setbacks in the Asia Pacific region.
Revenue Growth and Strong U.S. Performance
Revenue in the second quarter reached $51.3 million, marking a 16% increase from the previous year. The U.S. market was a standout performer, with revenue hitting $10.3 million and projected to exceed $40 million for the year. Consequently, Establishment Labs raised its revenue guidance to between $208 million and $212 million, indicating an anticipated growth of 25% to 28%.
Improved Operating Profitability
The company reported a significant improvement in operating profitability, with an adjusted EBITDA loss reduced to $8.5 million from $12.1 million in the first quarter. Additionally, cash use decreased to $14.5 million from $21.2 million, reflecting better financial management.
European Direct Market Growth
Sales in the European direct market surged by approximately 27% this quarter, setting a new sales record. Key markets such as the U.K., Spain, and Germany were instrumental in driving this growth, highlighting the company’s strong foothold in Europe.
Innovation and Product Development
Establishment Labs continues to innovate, with the Motiva Flora SmoothSilk Tissue Expander winning both the Innovation and Safety Awards in the 2025 Medical Device Network Excellence Awards. The Preservé procedure has also been well-received, with shipments set to begin in August.
Challenges in China
The Chinese market posed challenges, with performance falling below expectations due to a difficult market environment, including declines in consumer segments and aesthetic pressures. The anticipated ramp-up in China is progressing slower than expected.
Asia Pacific Region Setbacks
Despite sequential growth, the Asia Pacific region experienced a year-over-year decline, primarily due to challenges in China and the timing of distributor orders, underscoring the need for strategic adjustments.
Increased Operating Expenses
Operating expenses saw an increase of approximately $11.4 million from the second quarter of 2024, driven by the U.S. commercial ramp-up and higher shipping costs, impacting the company’s overall profitability.
Forward-Looking Guidance
Establishment Labs provided an optimistic outlook for the future, raising its 2025 revenue guidance to between $208 million and $212 million, reflecting a 25% to 28% growth. The company anticipates its U.S. revenue to exceed $40 million, supported by continued momentum and successful product adoption. They also expect to achieve their first positive EBITDA quarter later this year and aim for cash flow breakeven by 2026. Strategic focus areas include expanding their minimally invasive portfolio and launching new products like Preservé.
In conclusion, Establishment Labs Holdings’ earnings call highlighted a blend of strong growth and strategic challenges. While the company celebrates significant achievements in the U.S. and European markets, it must navigate hurdles in China and manage rising operating expenses. The forward-looking guidance suggests a promising trajectory, with expectations of continued revenue growth and operational improvements.