Establishment Labs Holdings Inc. (ESTA) Q4 2019 Earnings Report, Transcript and Summary

Greetings, and welcome to the Establishment Labs' Fourth Quarter and Full-Year 2019 Earnings Conference Call. [Operator Instructions]. Please note, this conference is being recorded.I would now like to turn the conference over to your host today, Mr. Jeremy Feffer. Please proceed, sir.

Thank you, Operator, and thank you everyone for participating on today's call. Joining me from the company are Juan Jose Chacon Quiros, Chief Executive Officer; and Renee Gaeta, Chief Financial Officer.Before we begin, I would like to caution listeners 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 involve material risks and uncertainties and the company's actual results may differ materially. For a discussion on risk factors, I encourage you to review the company's Annual Report on Form 10-K that will be filed later today with the SEC. The content of this conference call contains time-sensitive information accurate only as of the date of this live broadcast, March 16, 2020. 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 said, it is my pleasure to turn the call over to the company's Chief Executive Officer, Juan Jose Chacon Quiros. Juan Jose?

Thank you, Jeremy, and good morning, everyone. Thank you for joining us today. We are, like everybody around the world, extremely concerned with the humanitarian and economic crisis caused by the spread of COVID-19, and we will certainly provide our thoughts on that today.First and foremost, we are working to protect the health of our employees and their families, and we are in constant communication with our partners and plastic surgeons worldwide to help our patients, however we can. While we grapple with the effects of COVID-19, it is still important to discuss the strength with which we finished 2019. The fundamentals that make our business strong in 2020 and the actions we are taking and can take to adapt as our industry and the world economy manage through this global challenge.Let us start by discussing our fiscal year 2019. During the fourth quarter of 2019, revenue was $24.2 million, an increase of 47.9% over the same period of 2018. For the year, revenue was $89.6 million, an increase of 46.3% over a full-year 2018. These financial results are towards the high-end of the preliminary revenue ranges we announced in a press release on January 28. And it is another record quarter made possible by the continued global adoption of Motiva Implants.Issuing full-year guidance for a high growth company like ours is challenging enough in a normal environment and an impossible task with a rapidly developing story of the novel COVID-19. Prior to last week, we were planning to issue formal guidance for 2020, but given world events, we are going to forego providing formal guidance today.To help our shareholders think about our 2020 year, we would like to give some visibility into our first quarter results. And as of today, we anticipate revenue to be in the range of $23 million to $25 million. Please remember that this is based on the best information we have today and that we have factor in a significant impact to our business from COVID-19 in March. Assuming a more normalized environment for first quarter call in May, we currently intend to issue formal guidance at that time.I'm speaking with surgeons daily, as do all of our commercial team members, and plastic surgeons have indicated that they continue to operate as long as there are no restrictions in place by their government. To date, most patients would schedule surgeries are having those surgeries performed. Surgeons are seeing some slowing, however, in medical tourism, South Korea, for example, does have a portion of patients that come from China as Motiva is not available in the Chinese market and we expect those surgeries to be impacted.If an increasing number of countries such as Italy need to mandate significant restrictions to get the spread of COVID-19 under control, that will obviously impact our business more. The fact that we are in more than 80 countries is very important as the world responds to COVID-19. The diverse nature of our revenue approximately 30%, Asia-Pacific and Middle East, 40% Europe, 30% Latin America should provide some level of protection to a revenue as different regions will likely grapple with the worst of the virus at different times this year.Of course, as I mentioned above, we are not reliant on China for any primary aspects of our supply chain. As we think about forecasting our business, I can tell you that our executive team has decades of experience in the breast implant industry. One of the core capabilities of our company is that we are agile and adaptable organization that has deep experience dealing with changing situations and environments. Disability is the reason Motiva Implants have taken a commanding position in such diverse markets such as Sweden, Colombia and South Korea.Further, our collective experience as a management team has taught us the following: woman interested in breast aesthetics go through an extensive, thoughtful and deliberate process. If they had put their surgery and an extraneous situation develops, they may very well reschedule or cancel their surgery. But most of these women will ultimately opt to have their procedure, once that situation has resolved.This has not only been true during previous severe economic downturns, it has been true even when there has been a significant and sustained negative news headlines about the breast implant industry. As this situation resolves, we currently believe that we will be positioned to maintain the growth trajectory that we experienced before this pandemic started.One of our growth initiatives has been to employ a multifaceted marketing strategy, which includes social media engagement, online advertising, and patient and physician education. We are taking this opportunity to optimize our digital media communication channels as a mean of supporting, training and communicating with our plastic surgeons and patients. We are also pleased to have completed a $69 million public offering in January. This gives us a very healthy cash position. When we are managing this very carefully, given all of these uncertainties.During the fourth quarter of 2019, we used $4 million to fund operations compared to $10.9 million for the third quarter of 2019 and $8.5 million for the fourth quarter of 2018. We have done a full review of our 2020 budget, and as this pandemic continues to develop, we are able to access a number of levers to reduce, reallocate or suspend our expenditures. We can continue to manage our business with lower cash burn well into the future on the path to breakeven in cash flow positive.Most importantly, the underlying fundamentals of our business remain strong and our product, brand and reputation in the market have significant momentum. We have a very healthy cash position, healthy gross margins, and we are in a position to take the necessary steps to come out of this period stronger than others in our industry.Turning now to the specific drivers of our Q4 performance. Our increased market share was again driven by balanced growth across all regions of the world, along with stronger sales of our ergonomics implants, which generally have higher average selling prices. Specifically, Australia and Colombia outperform in our distributor markets and Germany and France showed strength in our direct markets. We continue to see this strength across the different regions of the world and are not beholden to a single region to drive our continued success.The launch of our direct sales force across Europe and Brazil continued to positively impact our performance. Direct market revenue for the fourth quarter accounted for 45% of our total revenue as compared to 41% of our total revenue for the third quarter. Brazil was the strongest market in 2019. For the full-year, Brazil generated 15.7% of our total revenue. This was consistent with 2018, meaning that Brazil grew over 45% year-over-year, a testament to the success of our investments in commercial execution in the second largest global market for breast aesthetics.Additionally, as we previously announced, two of our new distributor markets last year were Taiwan and Thailand, with the latter being one of the largest aesthetic markets in Asia. These markets were strong in Q4 and into Q1 2020. Although we continue to monitor developments closely in Asia in light of the ongoing pandemic.Improvements in gross margins was another highlight of our fourth quarter and full 2019 results. Gross margins for the fourth quarter were 67.5% of revenues, which is a significant improvement over 60.2% of revenues in the fourth quarter of 2018. Gross margins for the full-year 2019 were 61.3% of revenues, compared to 59% of revenues for the full-year 2018.Geographic expansion is a key part of our long-term growth strategy as we work to become the global standard in breast aesthetics. While we expect the U.S. and China to be significant drivers of our long-term growth by tripling our total addressable market, it is worth noting that we have a significant opportunity for organic growth into more than 80 countries in which Motiva Implants are currently commercially available.Plastic surgeons continue to adopt our products in their practices as both surgeons and patients talk about the benefits of our improved safety and patient outcomes. Patient preference is one of the key drivers of our market share gains and we are continuing our efforts to reach out directly to potential patients.During the fourth quarter, we announced the 1 millionth Motiva Implant end market. Notably, this very significant milestone was achieved in only 10 years and with the complication rate of less than 1% for safety related events in our post-market surveillance, which we published quarterly.Capsular contracture and implant rupture are the two most common reasons for failure associated with breast implants. A peer reviewed retrospective study of 2,506 patients at up to 3 years reported complication rates with Motiva Implants, SmoothSilk of 0.36% and reported no cases of device related implant rupture. No cases of capsule contracture, no double capsules and no late seromas. We are happy to see more scientific proof and clinical papers in peer reviewed publications with evidence of the unique safety profile of Motiva Implants.Just in 2019 alone, we saw 11 papers published on Motiva Implants, further confirmation of the science behind our technology and the clinical outcomes that we have observed in our quarterly post-market surveillance since 2010. We expect more papers to be published in 2020, including additional papers on the scientific basis of our technology and why its unique characteristics result in substantially reduced safety related complications. Hands-on surgeon experience, patient feedback and these publications are creating a groundswell of interest in adoption of our products, and we believe the safety profile of Motiva relative to other implant products on the market is a driving force behind our continued growth in market share gains.Our regulatory efforts continue to progress with geographic expansion for our current product offerings and a path towards the approval of several new products. We have the most comprehensive portfolio of smooth implants worldwide and are continuing to build on these offerings.We previously announced a 510(k) submission for SmoothSilk tissue expander in the U.S and CE Mark registration in the EU. These submissions are important milestone for our company and the tissue expander represents a meaningful addition to our product portfolio. The advanced design of our tissue expanders should fuel adoption in the breast reconstruction market for all of our products. We continue to work through the approval process with the respective regulatory bodies as we work to finalize our launch strategy.As a reminder, our tissue expander is a substantial advance for the industry as it includes our proprietary SmoothSilk surface and is the only tissue expander with an integrated port with no magnets, enabling the use of the expanders safely alongside MRI scanning. This is real innovation that can make a substantial difference to oncologists, plastic surgeons and patients, and we'll have a real impact on women's health.Turning to our minimally invasive breast augmentation initiative for Motiva Mia, we began cases in Asia last December. Similar to the introduction of minimally invasive surgeries in other medical specialties, we believe that bringing a minimally invasive breast augmentation to market has the potential to grow the worldwide total addressable market for breast aesthetics. For the global plastic surgeon community, we are beginning to see a transition to smooth implants, which will take some time to complete.Textured and smooth implants have different surgical techniques and responsibly transitioning from one to the other does involve some education. We have taken this ongoing transition as another opportunity to provide our industry, both surgeons and patients with further scientific details and medical education about our surface technology. As we provide considerable medical education around the world, we believe the transition to smooth implants and more specifically, Motiva Implants with our proprietary SmoothSilk surface will accelerate.We are also dedicated to growing our intellectual property portfolio and are protecting the innovations that differentiate us from others in the market. Last year, we announced that the U.S. Patent Office allowed a key patent application covering our unique implant surface technology. We are pleased to announce today that the patent office will issue that patent within a few weeks. We will continue to dedicate resources to developing innovations that improve patient outcomes and protect those innovations with a robust IP portfolio.Turning now to our U.S clinical trial. We are progressing in our FDA pivotal IDE clinical trial for Motiva Implants. In August of last year, we announced the completion of all surgeries in the aesthetic cohort, and during the fourth quarter we continue to make progress advancing the reconstruction cohort. Importantly, our U.S. submission timelines for our PMA to the FDA remain on track due in large part to the bifurcation strategy that we discussed last quarter.In light of the fact that we were able to complete the primary augmentation revision augmentation cohorts, we intend to pursue submission for the aesthetic indications ahead of our submission for the reconstruction indications. Recent communications with the FDA give us further confidence in this bifurcation strategy and we continue to take the necessary steps in this process.With that, I'd like to turn the call over to Renee to discuss the financials in detail. Renee?

Thank you, Juan Jose. As Juan Jose stated earlier, our momentum from the third quarter carried into Q4 and we are pleased again to report record revenues. You can find additional details on our fourth quarter and full-year financials in our earnings press release and our Form 10-K, which we plan to file later today.Total revenues for the fourth quarter was $24.2 million, which represents a 47.9% increase over the $16.4 million that we reported in the fourth quarter of 2018. Our reported fourth quarter revenue was also at the higher end of our preliminary range of $23.5 million to $24.5 million we announced in our press release on January 28.Total revenue for the year ended December 31, 2019 was $89.6 million, representing a 46.3% increase compared to the full-year of 2018. As Juan Jose mentioned, revenue growth for this quarter was again driven by double-digit growth in our direct markets, along with strong performance in our distributor markets.Gross profit for the fourth quarter was $16.4 million or 67.5% of revenues, which is a significant improvement over gross margin of $9.9 million or 60.2% of revenues in the fourth quarter to 2018.Gross profit for the year ended December 31, 2019 was $54.9 million or 61.3% of revenues compared to gross profit of $36.1 million or 59% of revenues for the full-year 2018. The increase in the gross profit margin percentage was driven primarily by increased volumes and cost savings delivered by our manufacturing operations team. Our gross profit percentage was negatively impacted by 4% during the full-year due to amortization related to the fair value of inventory recorded from our asset acquisitions of distributors in Q4 of 2018.Total operating expenses for the fourth quarter 2019 were $20.8 million, an increase of 12.3% compared to $18.5 million for the fourth quarter of 2018. This was a decrease of 10% from $23 million from the third quarter of 2018. SG&A expense increased $2.3 million or 15.5% to $17.1 million from $14.8 million for the fourth quarter of 2018. The increase in SG&A was primarily due to increase in personnel costs resulting from hiring additional sales personnel, higher commissions and marketing expenses.Our research and development expenses were approximately flat at $3.6 million for the fourth quarter in comparison to the year-ago period. Research and development spend continues to be a cornerstone for our future growth and product portfolio.For the full-year 2019, total operating expenses were $85.8 million, an increase of $25.8 million compared to operating expenses of $60 million in the same period in 2018. SG&A expenses increased $23.5 million or 49.7% to $70.8 million from $47.3 million in 2018. The increase in SG&A is primarily due to an $11.7 million increase in personnel costs from hiring additional sales and administrative employees; a $3.7 million increase in consulting and audit fees; a $2.4 million increase in sales commissions; a $2.2 million increase in marketing expenses; a $1.2 million increase in insurance costs; and a $400,000 increase in freight costs.Our sales force has grown to 94 employees and contractors from 67 in the year-ago period, driven by the addition of our new direct markets.R&D expense was $15 million or 16.7% of revenues as compared to $12.7 million or 20.7% of revenues in 2018. The overall increase in R&D expenses of $2.3 million is primarily attributable to our IDE clinical trial in the U.S. Net loss for the fourth quarter of 2019 was $5.5 million as compared to a net loss of $10.5 million for the same period in 2018. Net loss for the full-year of 2019 was $38 million as compared to net loss of $21.1 million in 2018.Our cash position remains strong. We hold a cash balance of $37.7 million as of December 31, 2019 and in January raised $69 million from a successful public offering of our common stock, issuing approximately 2.6 million shares at $26.25 per share. During the quarter, we used $4 million to fund operations compared to $10.9 million for the previous quarter and $8.5 million for the fourth quarter of 2018.For the year ended December 31, 2019, total cash used in operations was $30 million, a reduction of 11% compared to 2018. We are focused in further reducing cash burn in 2020 and beyond with a target of at least 20% reduction for cash used in operations in 2020.Especially in light of current events, we've done a full review of our 2020 budget and as the situation evolves, we have strategies in place to bring this target down further as needed. We are taking this pandemic very seriously and have developed a number of models and operating plans that would allow the company to get to cash flow breakeven with the cash that we have on hand, if COVID-19 disrupts global commerce and health care for an extended period of time.To end on a positive note, I'd like to tell you that our cash position has never been stronger and that our financial position continues to improve and scale in support of our global growth that we've been experiencing.I will now turn the call back over to Juan Jose for some concluding remarks. Juan Jose?

Thanks, Renee. I could not be more pleased with our performance and trajectory. It is clear to me that the investments we have made in research and development over the last 10 years are now the driving force behind our commercial success and growth. We are committed to continuing this innovation to drive our success for the next decade. And I am confident that we can be the market leader in bringing unmatched innovation to breast aesthetics and reconstruction. The very nature of our industry has prepared our management team to manage through challenging and unexpected situations, and we are operating our very best in such an unprecedented time.With that, I will hand the call over to the operator for Q&A.

Thank you. [Operator Instructions] Our first question comes from Rajbir Denhoy with Jefferies. Please proceed with your question.

Hi, good morning. Maybe I could start with the pace of surgeon training currently. Given the unprecedented times we're living in, are you still seeing interest on the part of surgeons to get trained on Motiva Implants and to start adopting your technologies?

Yes. Good morning, Raj and -- yes, I think it's a great question because we conduct a lot of medical education events month-to-month. It's one of our core capabilities. And with everything that is going on around COVID-19, of course, to protect our employees and also our surgeon partners, we are having to forgo face-to-face medical education at this point. Now we are switching our medical education to digital online training platforms. We've done this before. We'll just put more of an emphasis over the next couple of months to do this through digital means. But definitely, I think that it is an opportunity for us to be able to grow our digital platform in medical education, so that in the future we can use this to be able to contact and train surgeons even further than just with face-to-face medical education.

Okay. And maybe just as correlate to that, are you seeing the interest in a sense, Brazil, you've been doing quite a bit of training, in surgeon conversion, has the pace at which surgeons are reaching out or which they're agreeing to be trained on Motive Implants, has that pace slowed?

No, actually, to the contrary, what we’ve seen is that in the international market, where most surgeons were using textured breast implants for all of their careers, what they are doing right now is understanding that they need to learn how to use them with implants. So maybe they will continue to use texture implants for quite some time. But having that in their back pocket, it's an important thing for them. So we actually are seeing a lot of surgeons contacting us to be part of our medical education strategies.

That's helpful. Maybe, Renee, just in terms of your commentary around maybe the plans that are in place to reduce cash use spending, are there specific areas that you're thinking about targeting? The company had outlined potentially expanding capacity, folks are building another facility, are there areas that you're thinking about pulling back if you need to on spending?

For us, we're certainly focused on making sure that the commercial aspect of our organization moves forward and focusing like Juan Jose mentioned on medical education, but we're really looking at alternative plans across the board. And what that means for us is looking at ways that we can either alter the plan to still get to the end goal for -- as you mentioned, with the construction of the new facility, just simply altering those plans from a cash flow perspective. But ultimately, still trying to hit our end target as we watch this pandemic roll through. If it's a shorter timeline, that everyone gets back on pace, then we're going to be poised to be able to jump right back in.

Fair enough. Maybe just my last question, Juan Jose. And again I appreciate everything is very fluid, but prior to the COVID-19 outbreak and what's happening globally, the street has been looking for something around low 20% growth for you, this year, I think it was 23%. And I appreciate you taking guidance off of the balance of the year, but would you have been comfortable with a growth rate like that? Would that have reflected the momentum you've seen in the business?

Yes. The short answer is absolutely, yes.

Okay. Fair enough. Thank you.

Our next question comes from Josh Jennings with Cowen. Please proceed with your question.

Hi. Good morning. Thank you. I was hoping -- I just appreciate the way you guys have positioned guidance and given the first quarter targets. The midpoint suggests kind of stable revenue performance sequentially. And I think it might be helpful just to hear, I know you mentioned in South Korea and Japan probably had the longest exposure in Q1 to the COVID-19 outbreak. You talked about medical tourism being down in South Korea. But can any other color you can share just in terms of those two markets and how it's impacted Establishment in 1Q so far?

Yes. Thank you, Josh. Well, it's too early to tell the full impact. I think one of the strengths that we have at Establishment Labs is that -- the fact that we are present in over 80 countries, so that mitigates the magnitude of the ongoing pandemic. In a place like South Korea, of course, the authorities have been really good at acting quickly to contain the spread of the virus. So we are hopeful that this will result in a rapid resolution of the situation and everything can go back to normal in South Korea. But I think the more important thing is that, we do have an important situation ongoing. But we are a flexible, agile organization and we -- we've been adapting to complex environments way before this happened in the 80 countries that we are in. So we feel pretty strongly that we will be able to use that, that spread of revenue to our favor. And that's one of the most important things as we get through this.

Understood. Thanks. And then just was hoping that we could talk about the regional competitive landscape and specifically competitor companies outside of Allergan and Mentor or maybe the POLYTECHs and GC Aesthetics of the world, maybe to understand what percentage international market they represent? And then second, with the expected COVID-19 related downturn, it seems as if Establishment, and especially after this capital raise, is best positioned relative to these regional players to manage through, while the others may be vulnerable. I don’t know if you have any thoughts on that.

Yes. Actually post the Allergan global recall of their textured implants, these regional players represent roughly 40% of the world market. But what I would say is that for us, the important thing is that we have a singular focus on breast surgery. So this is something that will allow us to move faster than our bigger global competitors. And yes, I think the regional competitors are dealing with many challenges like, the increased regulatory scrutiny that brings about a lot of increased costs and scarce -- scarce access to capital. As always, at Establishment Labs, what we will do is continue to work hard to get as much ahead from this situation. So we think that we are poised to come out of this crisis with potential larger market shares gains.

Great. Then lastly for me, just on Mia. I understand you guys have a number of procedures under your belt. Any incremental details you can share just on the early experience in Japan? And then whether or not plans to expand have been put on pause just because of this COVID-19 pandemic? Thanks for taking all the questions.

Yes. Thank you, Josh. Well, we are very happy with the results from the first cases that were performed with Mia in Asia. And we are looking ahead to new cases being done and -- so far the results are very encouraging for us. Now, as you just mentioned, of course, COVID-19 does slow down, practices in several countries and that includes, of course, our ongoing clinical work. So definitely we think that as Japan gets out of this situation, we will see more cases happening. But the proof-of-concept is done and we are very happy to see this as an opportunity for the expansion of the market. And I think as we come out of this pandemic, what's going to be important to surgeons is how can I grow my practice? How can I get patients to my office? And things like Mia are long-term drivers of market expansion. So if we think about the total addressable market and how we can expand it in the future, Mia is definitely, at the top of our list.

Our next question comes from Marie Thibault with BTIG. Please proceed with your question.

Hi, good morning. Thank you for taking the questions. I would just love a reminder, you had some strong progress on the gross margin front. Can you remind us kind of high level geographies where gross margin comes in very strong versus very weak to sort of as we think about the potential impact of COVID-19?

Sure. Thanks, Marie. Yes, definitely we tend to see higher gross margins, of course, in markets where we're direct and that would be more heavily weighted towards Europe, just given that our direct presence there and ASPs that those regions or those countries can generate. But we do have a pretty healthy mix. I would say across the board in our distributor markets, it's sort of a wide range, but I would say it's more heavily weighted towards direct markets in Europe.

Okay. Thank you for that detail. And then I guess my other question is, I know that Costa Rica, like many countries across the world are getting prepared for a larger outbreak. Can you tell us a little bit about how much that might impact some of your manufacturing operations there on the ground in Costa Rica?

Yes, absolutely. One of the key things for us is to protect our employees during this period while we continue to serve the plastic surgery community and our distribution partners worldwide. So it is important to balance those two. At the current time, we have full management crisis mode here at the facilities in Costa Rica to make sure that if there is any outbreak in the facility, we can contain it immediately. Now, one of the key things is that we have a very healthy stock of products in our distribution centers worldwide. So we can -- if we were to have a production shutdown, we can still be very flexible in -- with all the stock of product that we have at the different distribution centers. But so far the situation here in Costa Rica is progressing. We have a very strong health system in this country. So it is very important to us to work with the authorities as we protect our employees.

Thank you so much for that detail and good luck.

Our next question comes from Chris Cooley with Stephens. Please proceed with your question.

Good morning and thank you for taking the questions. At this point, maybe if you wouldn't mind just going back on the regulatory pathway, could you maybe just update us a little bit more detail regarding the reconstructive cohort? I realize that was a very unique framework in which the company was pursuing. Just kind of curious but how far along -- .you mentioned you continue to make progress. But we're now obviously moving forward with an aesthetic filing first. So just any additional color you could provide there? And I have a quick follow-up. Thanks so much.

Thank you, Chris. Yes, I think one of the most important things here is to remind everyone that we finished all the surgeries in the aesthetic cohort back in August of 2019. So given our bifurcation strategy, we do plan to get approval for aesthetics, which represents over 80% of the U.S. market ahead of our reconstructive indication. Now, of course, we continue to focus on getting that reconstructive indication cohorts done quicker. But eventually this COVID-19 is catching up with the many hospitals that do perform the reconstructive surgeries. So I perhaps can give you a little bit of an update of things that we will do during this period. So, one of the things that we are doing is proactively assessing and developing a plan with immediate implementation to minimize the impact and maintain these steady goals. So we have developed a virtual follow-up visit plan in collaboration with the IRB and this has been already communicated to the FDA. And this is done to uphold our patient safety, but also to minimize the impact on enrollment during this period and on follow-up. So I think that by next quarter we will be able to give you more color on the impact. But I would say that before this started, our reconstructive cohorts were continuing to enroll nicely.

Appreciate that color. And then just for my follow-up, I think during the last unfortunate financial crisis, we were all fairly myopic looking at results of Mentor and Innomed here in the United States. But with COVID-19 being a global pandemic, can you just remind us how the international markets responded, and more specifically I'm looking for that lag from the deferrals for the patients that elected to postpone their surgeries. What was that? Was it one quarter, or was it a two quarter phenomenon? Can you just maybe talk to that kind of return to the market that we saw after the last crisis outside of the United States? And I'm sure it varied by region. So just any additional color you could provide us there would be most beneficial. Thanks again.

Yes. Thank you. I think one of the key things and it goes back to the 2008 crisis, it goes back to all the situation around BIA-ALCL and the negative new cycle. And that is that the patients that go for breast augmentation, they tend to be very committed to this procedure. And they have done an extensive amount of research. They usually have gone through an entire process with the plastic surgeons and several different consultations and they have taken a decision. They may postpone that decision given the current situation, but you're basically stockpiling these cases for them to happen after the situation is resolved. During the 2008 crisis, the impact in the international market was actually mild. You could call it, that the market stayed flat, but it certainly did not come down. So I think that it is important to remind everyone that, there is a difference between aesthetic elective surgery and other elective surgeries that we see, like knee surgery or spine surgery that people may access. The difference in aesthetics is that: number one, most of these procedures get done at specialized aesthetic surgery centers, a lot of these centers are owned by the plastic surgeons. So they have the ability to scale up these procedures. They don't have to be on the waiting list to have these operations happen. So I think what we are looking for is to support our plastic surgeons in getting back to business as quick as possible once the situation is resolved. But we are very mindful that in previous situations, the aesthetic breast surgery market has stayed very healthy.

Thank you.

Thank you. At this time, I would like to turn the call back over to management for closing comments.

Thank you. And thank you, everyone, for joining us today in our earnings call. We look forward to providing our next quarterly update in May. We wish you a very good day and good health.

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