Establishment Labs Holdings Inc (ESTA) Reports Q4 and Full Year 2023 Results; Provides 2024 Outlook
Revenue Guidance for 2024: ESTA projects revenue between $174 million to $184 million, marking a 5% to 11% increase over 2023.
Q4 2023 Revenue: Reported at $31.6 million, aligning with previous announcements.
Net Loss: Q4 net loss expanded to $22.1 million from $13.2 million in Q4 2022.
Operating Expenses: Increased slightly in Q4 to $42.7 million, up from $41.3 million in the same period last year.
Adjusted EBITDA: Q4 saw a loss of $17.3 million, compared to a loss of $8.9 million in Q4 2022.
Cash Balance: Decreased to $40 million at year-end, down from $66.3 million at the end of 2022.
On February 28, 2024, Establishment Labs Holdings Inc (NASDAQ:ESTA), a leader in medical technology focused on women's health, particularly in breast aesthetics and reconstruction, disclosed its financial outcomes for the fourth quarter and the entire year of 2023. The company also provided financial guidance for 2024. The details of these results can be found in ESTA's 8-K filing.
Establishment Labs Holdings Inc is renowned for its innovative medical devices and aesthetic products, including the Motiva implants brand. The company's products are distributed across Europe, Latin America, Asia-Pacific/Middle East, and other regions through medical distributors, direct sales, and partnerships with physicians, hospitals, and clinics.
Financial Performance and Challenges
ESTA's fourth quarter revenue remained flat at $31.6 million, consistent with the preannouncement on January 9. However, this represents a significant decrease from the $43.8 million reported in the same quarter of the previous year. The company's net loss from operations widened to $22.1 million in the fourth quarter, up from a net loss of $13.2 million in the year-ago period. This increase in net loss is attributed to higher operating expenses, which rose to $42.7 million from $41.3 million in Q4 2022.
Despite these challenges, ESTA's CEO, Juan Jose Chacon-Quiros, remains optimistic about the company's future, citing stabilizing markets and improving demand. The company has taken steps to reduce expenses and cash use, securing its balance sheet with a recent $50 million private placement and an amendment to its credit facility.
Creating shareholder value is of the utmost importance to us, and we remain acutely focused on achieving positive adjusted EBITDA later this year and becoming cash flow positive in 2025," said Chacon-Quiros.
Strategic Moves and Industry Position
The company's strategic initiatives, including the launch of Motiva Implants in China and the first U.S. commercial procedure with Motiva Flora Tissue Expander, underscore its commitment to becoming a global leader in the medical technology industry. With the pending approval of Motiva Implants in the U.S., ESTA is poised for significant growth and innovation in an industry ripe for change.
Key Financial Metrics
Key financial details from the income statement reveal that the gross profit for Q4 stood at $20.6 million, or 65.2% of revenue, compared to $28.2 million, or 64.3% of revenue, for the same period in 2022. The slight increase in gross margin percentage reflects the company's ability to manage cost of revenue effectively despite the drop in total revenue.
From the balance sheet, ESTA's cash balance decreased to $40 million at the end of 2023, down from $66.3 million at the end of 2022. This decrease is primarily due to operating activities and investments in new facilities, offset by expense reduction initiatives and the company's share offering on April 27, 2023.
Adjusted EBITDA for the fourth quarter was a loss of $17.3 million, which is nearly double the loss from the same period last year. This metric is crucial as it provides insights into the company's operational efficiency and underlying profitability before the effects of financing and accounting decisions.
Analysis and Outlook
Looking ahead, ESTA has provided revenue guidance for 2024, projecting an increase of 5% to 11% over 2023, with expected revenues ranging from $174 million to $184 million. This guidance does not include potential revenue from Motiva Implants in the United States, which could provide an additional boost upon FDA approval.
The company's focus on reducing expenses and securing its financial position is a strategic move to navigate through current challenges and capitalize on future growth opportunities. With a positive amendment to its Oaktree credit facility and continued progress with the FDA, ESTA is reinforcing its commitment to innovation and market expansion.
As ESTA approaches its 20th anniversary, the company is at a pivotal juncture. Its differentiated technologies and global market presence position it well for multi-year growth, aiming for global market leadership in a sector that has long awaited significant innovation.
Investors and stakeholders can expect ESTA to continue its trajectory towards achieving positive adjusted EBITDA and becoming cash flow positive, as it leverages its technological advancements and strategic market expansions to drive shareholder value.
For more detailed information on Establishment Labs Holdings Inc's financial performance, interested parties are encouraged to join the conference call and webcast scheduled for today at 4:30 p.m. Eastern Time.
Explore the complete 8-K earnings release (here) from Establishment Labs Holdings Inc for further details.
This article first appeared on GuruFocus.
