Establishment Labs Holdings Inc. (ESTA) Earnings Call Transcript & Summary

Okay. Good morning, and welcome to our second session here in the MedTech Track of UBS' Virtual Health Care Conference. I'm Matt Taylor, the U.S. Medical Supplies and Devices Analyst, and I'm really pleased to be joined by management from Establishment Labs for this session. So we're going to have a conversation with Juan Jose Chacon, who is the CEO and Founder of the company; and also Renee Gaeta, who is the CFO. So as usual, we're going to have about 45 minutes of fireside chat, which I'll run with lots of questions here from UBS. But if anyone on the line has questions that they'd like to ask, just shoot me an e-mail or you can send in a question through the presentation, and we can try to weave that into the conversation. So first, just want to welcome JJ and Renee. Thanks a lot for taking the time with us today and looking forward to a great conversation.

Good morning, Matt.

Good morning. Okay. So maybe just to get us started, would love to get a little bit of an update on the business at a high level. Could you talk about some of the dynamics that you've seen here in the first quarter, given the nice bounce back in growth that you saw year-over-year?

Yes. Certainly, we saw a good recovery and continued growth in Q1. We are pleasantly surprised to see that, especially with the pandemic still happening throughout the world. And reminding everyone that we are -- we operate in about 80 countries outside of the United States. So we're watching all of those countries, but we're really happy with our growth. We saw growth in all major regions for us. So throughout Europe, Asia Pacific and Latin America, it was a great quarter. And Brazil, which is our largest country, as a percentage of revenue, it was 11% of total revenue in the prior quarter, it was $13 million. So it's been great to see how each country has been managing through either deferrals or suspensions, but there's great demand there, and we're clearly taking market share.

Fantastic. Yes. You touched on this that you're in so many different regions and countries. Are there any that were particularly strong or weak, any trouble spots that you're watching out for?

Yes. We certainly have seen pockets of good growth as well as other countries sort of managing with the additional protocols. I think for us, in Europe, in particular, there were some strength in France, in Germany. And then if you look to sort of Latin America and even in Asia Pacific, you've got some good growth coming in countries like Vietnam and others. So it was nice to see a dynamic mix where we're not seeing growth in particular from one country, but we're sort of seeing it throughout as the world manages through, but our products are doing well.

Understood. Understood. And are you willing to give any color on more recent trends or maybe just talk about how you saw trends through the quarter and understanding better kind of the jumping-off point as we look into the rest of the year?

Yes. We certainly have seen growth continue. As we go through the year, it's been nice to see. There were some deferrals that happened, I think, in Brazil, in the later half of March. But February was a good month for them as well, and we just continue to see demand for our products is happening. And I think people will talk about it, but I think people are really excited for our new product launches that are coming this year as well.

Yes, certainly. Certainly. Well, you did raise guidance in Q1. You had a nice beat and then raised by a little bit more than that. Maybe you could just spend a little time talking about some of the assumptions that go into your guidance with regards to COVID and other key factors that are going to drive growth?

Yes. Certainly, it's a challenge to come up with that number, but we did want to make sure that The Street understood what our expectations were for the year, especially coming out of Q1 with good growth and as I mentioned, continued momentum has been happening. And so when we're thinking about giving guidance and whether or not to be able to put in that range and thinking about what the rest of the year is going to look like. We're always conservative in our estimates, but we felt really comfortable with being able to provide the range that we did for the rest of the year and expect to see continued growth, again, in all regions across the board, what we have factored in, whether or not countries will continue to have maybe potential deferrals of surgeries as they go through the rest of the year, just given the dynamic of what's happening in all of the countries with vaccine rollouts, maybe not as fast as it's happening in the United States.

Understood. Yes. And you were able to do that last year when things were really dynamic, I think, to provide ranges that were conservative enough that you came out and still outperformed and you kind of alluded to it here. You have to be a little bit more conservative than usual or a little bit more of a range with the dynamics still kind of in play around COVID?

No, there's certainly an additional factor that's being considered for us. But we are really close with our distributors in distributor markets and also, of course, the plastic surgeons in our direct markets to try to understand their throughput and what's happening. So we use that collective knowledge to come up with our range of estimates and, of course, factoring in not only what the pandemic might be happening, but also actually really thinking about future products for us and the continued growth and dynamics that we're seeing.

Understood. Understood. Let's spend a minute on the portfolio and the product position. So I just want to start by talking about the core products. And just give us a sense for how you're positioned in the market? What about your product strengths really resonates with surgeons and with customers? And could you talk about how that compares to some of the other major competitors?

Yes, of course. I think that over the last decade, what we've been able to do is to prove that our focus in science and innovation has really paid off for our patients. If you think about like the fundamental reduction in the cash flow contractual rate in rate, now with data over 10 years, we're closing in on 1.5 million out here. And we still are in less than 1% reoperations due to these 2 complications. In the past, were the 2 main reasons for reoperations in breast surgery. So I think that we've been able to prove very clearly that the safety profile of Motiva Implants, it's nearly in a different league. Now we often talk too much maybe about safety and don't talk about all the great things we are doing with the aesthetic side because that's what these patients are going there for. It's an elective procedure. Patients are excited about the possibility of doing this. And the last thing you want is spend your hour of consultation on safety and forget about the reasons why they're there. And that's why beginning in 2014, when we brought to market the Ergonomix implant, we really started to focus on what were the main objections of women when they go for breast surgery. And definitely, one of the most important things to them is this notion of naturality, which is -- tends to be a little bit fluid depending on the market. But you always have this idea that naturality means, for us, the book that looks more like a real natural breast but also there's this new dimension that we brought forward with the Ergonomix implant, which was it has to feel like real breast tissue. It has to move like real breast tissue. It has to be comfortable and that's why this notion of ergonomy in breast surgery is having such a profound effect on the patient experience. And now we are moving to the second generation of Ergonomix, based on all of that success. Ergonomix is basically our premium offering today, and it's also in most regions of the world, our best-selling product. This industry in the past was commoditized. And with Ergonomix, we begin to prove that basically, this product, although more expensive, it is valued by patients even more. So we're very happy to see Ergonomix now moving to the second generation, and that is a platform technology that will allow us within that family to do also minimum basics. So these are great things for us because the patient experience really is driving a lot of the demand for Ergonomix and then subsequently, we believe, for other products like minimally invasive. But we're happy to see that solve the safety side of the business, ahead of everyone else and then can focus on what's important to do.

Fantastic. Yes. Maybe we could talk a little bit about the rollout of Ergonomix2 and how that is enhanced from the original offering. Could you speak to when you'll start to ramp some of the commercial cases? And then maybe give us a sense for the delta between the 2 generations? And whether you think you can get any additional pricing for the new one?

Yes. This second-generation of Ergonomix is just such an amazing leap forward because we're talking about a next-generation chemistry within the silicon valley. So we call this the super-silicones. And what it allows is for enhanced mechanical properties, enhance chemistry and this is something that we've been looking to do for many years. We started working on this around 6 years ago, and we're happy to see it getting closer to going to market. Our plans are to start rolling this out in the second half of this year, especially in Europe. And one of the great things about this new generation is that it allows for some of these fundamental thinking around the ergonomy to be enhanced even more, like, so more comfort, more naturality, more feeling of patients saying, this is -- feels like part of me, I cannot say which side is the silica and implant and which side is of my breast is my real breast tissue. So these are things that, for us, are excellent when we think about how is this going to be valued in the market. So one of the things that we did very well with Ergonomix is that we were good at using digital channels and social media to create awareness around the benefits of this technology. So that's why with Ergonomix compared to our previous offering, which is just the Motiva around who was a 50% delta in market. So we are getting a lot more value out of this. And now with Ergonomix2, of course, we expect this to be even more of a premium offering. Depending on the market, I think we'll use different ranges. But I think based on our past experience, we are very comfortable with patients understanding what these features can be to them and not getting the plastic surgeon to absorb that cost is important as well.

Understood. Understood. It might make sense to just jump here to Mia because it's kind of the next step in the chain of a line of implants that you're now coming out with, that's even more minimally invasive and you've had some really exciting data out of the early experiences with the case series that you did in Costa Rica. So could you talk about how Mia has been accelerated because of the approvals of Ergonomix? And then maybe just touch on that opportunity and some of the early data and talk about why you're so excited about it?

Yes, of course. When I was talking before about objections from women to breast surgery, one of the main ones was around this procedure really getting in the middle of their lifestyle. So having taken a lot of time off to have the procedure. For a lot of patients, general anesthesia was a big concern. For other patients, it's size of the scar, location of that scar. And with minimally invasive, we're really addressing some of the most important objections of women that are interested in breast aesthetics but don't want a traditional breast augmentation. So we, again, began working on this years ago. We've got interested in this because of what we had seen in the Japanese market. We've been in the Japanese market in the aesthetic side for years, and one of the things we've lived is that there was a group of women who did not want a traditional breast augmentation, yet they were going for this somewhat dangerous procedure of injecting hyaluronic acid in their breast. And we realized that they were paying even more money for that than the traditional breast augmentation and we started looking at that as something that we could solve. So as a women's health company, there are situations like that where we say, this is something where our company can benefit. And I'd say, time solves something for women. And with minimally invasive, in this data that we have seen from the first 100 patients is still incredible because we've been able to address some of these fundamentals. So if we go to procedure time, we're talking about to skin to skin 15 minutes in average over these years. Then if you look at the incision size, it's very small and it's hidden in the axilla. Beyond that, patients are getting discharged in less than 30 minutes after the procedure, and they're experimenting very little pain or discomfort in the post-op and going back to the daily activities in the less than 2 days. But that's just amazing data and one that we're going to use in the market for Mia patients because again, this is something what you want to create awareness, you want to be able to have women understand that there's something new out there that those women that would never go for a traditional breast augmentation would eventually say, well, that's it. That's what I do.

For reference, could you just talk about how the 15 minutes skin-to-skin and 30-minute discharge, 2 minutes back to normal activities, how does that compare to some of the traditional implants and techniques?

Yes, of course. It's nice to have a short procedure because it shortens that entire time from the patient going into the center and eventually leaving. When you look at traditional breast augmentation, there's a lot of free-up downtime, I would call it, in which you have to get the -- all the different preps for the surgery to take place. So that is not only the surgical time, is the prep time for surgery itself. But a traditional surgery, it's usually around 1 hour. But if you have the prep time, then that gets to probably around 2 hours to begin with. So it is important that you have less prep and then less surgical time and then a faster discharge because then that whole timing of the patient going into a center and then leaving, it's reduced significantly. Usually, patients stay at the center in traditional breast augmentation for up to 6 hours. So this, in terms of thinking about your day, basically traditional breast augmentation takes you a day. That's what we need to think about. When you think about this one, it's more like part of your morning or part of your afternoon, and we realized that patients, at first, in the first group that we did, we want it because we were conservative. We wanted them to stay longer. And then we realized that they were just getting bored there, and they were saying like, look, I feel great. I want to go. So eventually, we started allowing them to be able to go home early. And then when we saw the post-op levels of pain and discomfort we realized, this was also a big change from traditional breast augmentation. When you think about the -- going back to normal activities being less than 2 days, that compares to about a week for traditional breast augmentation. And then again, it goes down to like in traditional breast you took your entire day for the procedure, and then you're taking your entire week to recover. With Mia what there -- you can think about is that you're taking part of your day and then maybe your weekend to recover, you're back at work on that.

Right. Right. Yes, it was amazing to see some of those testimonials from the case series. The one we're so comfortable post-discharge basically ready to go back to normal activities and almost seem like right away. So it makes the surgery as minimally invasive as I've ever seen, almost like going to the dentist or something like that. So that's fantastic. So you did a lot of work to talk about market sizing and how this could change perception and change the size of the market. Could you delve into some of that and some of the findings that you had when you went out to interview all these folks and understand how this could change the market for breast surgery?

Yes, of course. And we did conduct a lot of market research in many different geographies, and what we realized is that this market is bigger than we had thought about at first because when we did all of this market research, we wanted to size how many new patients could we get. So we realized that of the total operation of Mia potential patients, half of them are women that are significant level of awareness about traditional breast augmentation and were thinking about traditional breast augmentation. But when given this option, said, well, I'd rather have that. And then from that group, most of them realized that this potential option came at a premium. And they felt like it was valued correctly at a premium. So that is very important in terms of willingness to pay and where we are going to put this pricing for this procedure. But now there's another group, another 50% that is completely new. These are women who are not happy with their breast size or shape, probably are using a padded bra, maybe using silicon inserts or some other things to have better shape but are not interested in traditional breast augmentation. So that is super exciting, not only for us, but I think for plastic surgery in general because those patients, eventually, once they enter the category, may do other things. And this is great for plastic surgeons. So when we think about the size of the current market, which is set be around 1.5, we're basically tripling that market. And one of the things in the series is that we've realized that we can do significant augmentation with 2 cuts up and in some patients in 3 cuts up. So that's something that we're going to take into account in the next phase of market research because that may enhance even more that size of the market.

Understood. And we talked about some of the benefits to the surgeons to before with shorter procedure times, they can do more procedures with better patient satisfaction, that's going to help their business with the word of mouth. So there is kind of a win-win-win there. In the past, you referred to being able to get more premium pricing for Ergonomix and Ergonomix2, it sounds like and it would seem I know from your market intelligence work that there's an implied -- it's almost a doubling, I think, of the implant price. So maybe just to spend another second on how the practice economics kind of feed into that and the patient willingness to pay? What did you learn more specifically about getting to that price point?

Yes. I think it's important to continue to explore those possibilities because we certainly don't want to misprice this. And one of the things we've realized is that it's going to be very geography dependent because there are places where you have a lot of price sensibilities, yet people understand within that context that you're going to have a more premium pricing for a procedure that is minimally invasive. So I think definitely we're going to drive that. But one important thing here is that given the time that it takes for these centers to have patients going through not only the procedure, but before and after, much more quicker. It allows them to have faster flow within that day. So the unit economics can be very much in their favor, even though this comes at a premium to everything else they've seen before. So I think there's that part that is very important when we think about it and also the fact that they understand that some of these patients would have never come to their center, if it wasn't for Mia. So that's, I think, a combination that can be very powerful because we're creating value for these centers in a different way. So if you think about a center, usually, they find it difficult to do more than 4 or 5 cases in breast aesthetics per day. With this, you can significantly increase the patient flow per day and that unit economics works in our favor.

Understood. Yes. And could you just talk about the time lines or mind us the time lines for Mia in different geographies? And talk a little bit about any guideposts or additional data that we should be looking out for this year?

Yes, of course. So we announced that we had submitted for approval by our notified body in Europe, tools that are necessary for the Mia procedure. We did receive the approval of the notified body back in December for the diamond implant that is used for minimally invasive. So with that, we plan to have premarket activities in the last quarter of this year, hopefully, and that would allow us to launch in Europe in some select geographies earlier next year.

Understood.

Now, in terms of things that we should be looking at so the -- we have this IRB approval for a 60-patient series in Thailand, and that's something that we're hoping that there are travel restrictions in Thailand soon get lifted so that we can begin that. But we're going to continue learning. We're going to continue doing cases. And as we do these things, we'll keep posting our progress on that.

Got it. Got it. And then for other big geographies like the U.S., could be a few years away, can you just remind us what you're thinking about for some of those larger ones like the U.S. and China for Mia?

Yes. So you can think about one of the opportunities with Mia is that we are piggybacking on all of the safety data that we've used for years. It has the same surface technology that we've used since 2010. So we have a lot of data on that. It shares a lot of formality in terms of manufacturing process and the chemistries. So we feel very confident about that. So when we think about getting approved in China, on top of that approval, we are going to work to have the approval for Mia. Same thing in the U.S., once we get approved for Motiva Implants, then we're going to use that approval to be able to supplement it for Mia.

Understood. Understood. And can you remind us on the core Motiva Implants, what you're expecting for the time line for U.S. and China so this year could be a big year for the company finally getting the readout of the data for the U.S. study? So what could that mean for U.S. approval?

So the -- for China, we have spoken about 2022 being a year of an approval. And for the U.S. with the 3-year guidance, we look at the second half of 2022 to be able to get that data to the FDA for subsequent approval.

Understood. Understood. And just remind us that when you're running these U.S. studies, how derisked do you view that data as being, given you have so much data globally on these implants and you celebrated your 10-year anniversary of the registry data last year, which was very good, very clean data?

Yes, I think it's one of those where we have this amazing wealth of data that would gather in so many different geographies, including with highly joint countries. And there's also independent registries that are out there in different countries like Australia, Scandinavia also has really great registry data and those are independent confirmations of everything that we've been talking about. So yes, we have a privilege to be able to go to the FDA not only with the data from the U.S. clinical trial, but also with this amazing real-world data that we can give to them. And I think that puts us in a really good spot because it's not often that our companies come to the FDA with that amount of information.

Right. Right. So maybe I'll take that opportunity for a transition to talk about the competitive landscape because safety is one area where you really stand out. There's been some concerns with associated cancer with other types of implants like textured implants. And so could you talk about how -- what you're doing compares to what some of the larger competitors are doing today? And do you see anybody that's doing the kind of development on safety or on aesthetics that could actually make them more competitive in the future? Anything that you're watching kind of coming up in the rearview mirror?

Yes. I think that you have to go back to the region why this company was created and it was to bring this notion of women's health to breast surgery, where it was really lacking. And we did that through science, through innovation and by developing new technologies space, not only on the input of the surgeons, but also most importantly the application. So when you think about everything that has been going on for the last few years in terms of regulators worldwide imposing restrictions in legacy technologies, we view that as a positive because it not only helps us, of course, in terms of being able to shine even further with our technology, but it helps patients start to like get away from this old technologies that I think definitely affect market growth. Once those technologies are flushed out, then eventually, there will be more market growth for that traditional market. I think that when it comes to us and what we've been doing, we'd be been able to prove that you don't need those technologies. These companies, our competitors have traditional smooth implants, and those traditional smooth implants are safe to use. So the problem for them is that we've been able to create within that smooth category, a much more advanced type of offering. So we continue to work. We continue to innovate. We're bringing out the next technologies with Ergonomix2 going into breast reconstruction with amazing opportunities. So it's also a question of speed and trajectory, I think that we just have a better vector, and we're going to get faster to where we want.

And more specifically, it was interesting to see Allergan talking about an exit of a lot of international markets earlier this year. And then there was some news that Mentor might be looking for a buyer. Those are 2 of the bigger players in the market. What are those changes signal to you about how the market dynamics are changing?

Well, I think definitely, we are reshaping this market because of all of the innovation that we're bringing to it, the value that we are creating for plastic surgeons and patients and by reshaping this market, I think some of the traditional dynamics are changing and already in the international market, not having Allergan in a lot of these markets signals what their strategy is for the category. We still have core markets in which we can go into over the next few years and eventually be able to capture market share from those existing Allergan territories. But definitely with Mentor, Mentor is an important player in the international market, and we continue to chip away from our customer base. And we'll keep working at it. So when you see those news, we're not surprised because that's part of our job.

And remind us in some of these countries where you've had a presence for a long time, where has your market share gone? Are there markets where you dominate now? Could you give us any anecdotal data points in different geographies to help us understand where your share could go over time?

Yes. So look, in reference to your previous question, I think it's interesting that we used to think that, for us, market dominance was going to be like in the high 30s, low 40s in terms of market share. And now with the exit of Allergan from some of these markets and also some things that we are seeing with Mentor, we actually believe that our market share could go to high 40s and given more than 50% because we are seeing that in some markets in which the dynamics have pushed our off-market share in places like Germany, we're like over 35% now and continue to grow. We see those dynamics in other European countries. There are places in Europe like in Scandinavia or in Austria, we're very close to 50% market share. So those are really good reference points. And then we go to also price-sensitive countries like Vietnam or Thailand or Colombia or Mexico, where we've been able to get 40% market share or more. So that's a real good combination of different markets where we have seen and prove that even though we sell our products at premium, we're able to be market leaders.

Understood. And what are the pushbacks or the reasons for doctors still not using your products? What are the barriers that you have to break down to push that share higher?

Yes. I think that's always something that I'd say to our commercial team is that even if half of the surgeons are choosing our products, there's another half that may not be choosing that. And when you look at that group of customers, what you look at is the most conservative surgeons, also, you see a lot of surgeons that have used primarily texture devices for their entire career and they're currently not interested in learning new techniques. But I think with everything going on and with women coming to their practice and asking for Motiva Implants, I think that, that awareness and that push from patients is going to get them to get into our medical education program, eventually start using our products, maybe in the most difficult cases and that eventually can translate into them using our implants for most patients.

Understood. Understood. I wanted you to just comment a little bit on the broader aesthetic market from 2 angles. One is during the pandemic and with Zoom and just to focus on health, I think we've seen more people interested in getting aesthetic procedures done. So just curious about kind of that short-term COVID impact on how people are viewing valuing aesthetics? And then zooming out, even before that, there's been more and more adoption of these kind of procedures, more awareness of them and more acceptance of them over time with things like social media and celebrities getting things done. So I was just wondering how you think about those trends playing into tailwinds that your business could see over the short and long run?

Yes, I think the pandemic has accelerated 2 very important trends for aesthetics. One is to invest in yourself. This awareness of the aesthetic possibilities. Before there was a certain degree of shaming to people that choose to have an aesthetic procedure. There's all these questions around vanity and in some countries even to religious conditions that may take you to not choose an aesthetic procedure or where you want one. I think our work in trying to understand millennials led us to believe before the pandemic that they did not care about some of the objections of previous generations and they were really open to aesthetic procedures. The pandemic has accelerated that even further. And we think that's there to stay. We think that people are going to continue opting for aesthetic procedures even more than before. And then the other part is the whole digital side of aesthetics, where patients are using digital channels to learn more and be aware of the options. And then instead of asking a surgeon or a physician, they're going to their peers and asking them how was efficacy here for you? How did it go? And they actually believe those people even more than a physician. So it changes a lot of the common things that we used to believe in aesthetics, and it's creating great opportunities for everyone. But at the end, it is about being able to capture patients and sending them to centers where our products are used. And I think that's going to be the next big 5 in aesthetics is about how can you capture those patients ahead of them.

Right. And that's probably worth another question because your company has done a lot digitally and trying to enhance the patient experience and help them with tools to engage in the procedure and learn about it. Maybe help us understand how that's evolved over time? And then how you're offering in your patient experience stands out versus some of the competition?

Yes. I think that when we think about us launching Ergonomix in 2014, 2015, one of the things we realized is, well, if we want to price this correctly, we need to have patient awareness. And that's how we started like to really invest in our digital channels and try to create enough awareness with social media. And over the years, we've been able to build that, and that's real like growth. We're going out there. We're having engagement with patients every day. We have 15x more engagement than our next competitor, and that's where you really want one engagement. You want to be able to have a conversation with people who are interested in these procedures. And then as we look forward, I think we're doubling down on our investments in digital. We believe that that's the future. And definitely, with things like minimally invasive and even in breast reconstruction, is going to help us get this new group of patients to Motiva.

Got it. Got it. And we talked a lot about how your better safety and aesthetics will allow you to gain share. We know what you're projecting for your growth this year. What do you think of the overall market growth going forward? And if you could comment on the short-term dynamics, too. How do you expect that to evolve here post-pandemic?

Well, the market is set to be growing the traditional breast aesthetic markets that are growing around 3% to 5%. There are regions like Asia that are growing a lot faster, especially China. China is one of the most interesting opportunities in breast aesthetics because they view this as a luxury option. So instead of buying a Hermes bag or something like that, they're going for breast augmentation. So we definitely think that when we go to Mia, that's going to have an accelerating effect on the overall market. Because some of the patients that are getting interested in Mia but are not good candidates for Mia may eventually say, well, since we're here, why don't we just look at all their options. And that's something that we think is going to happen as well with safety standards getting stricter, then you're going to have more awareness that there are safe options out there, and that's also going to help with accelerating the market growth. Remember, that market growth of 3% to 5% is based on legacy technologies. With new technologies, that's bound to increase even further.

Understood. I think I got to get Renee involved here with a financial question. But I was curious, Renee if you could just talk at a high level about margins. So maybe help us think about how you're balancing all your growth opportunities with opportunities for margin expansion over time? And how should investors think about your philosophy there this year in the next couple of years as you start to get more scale?

Yes. Certainly, we've seen improvements in gross margins prior to being public and then alongside it. And I think that, that is extremely important for us. As we think about new product lines expansions or developments, we've always talked about sort of pricing the next product up at a higher price point. So that would be accretive to our gross margins. And that's the trend that we're on. I think for right now, we want to make sure that we level set with expectations and realizing we're sort of in that low to mid-60s as we stand right now. And until we sort of get these additional product lines extensions out there and see the growth, we'll speak more intelligently to it, but we're super excited about not only Ergonomix2 and the tissue expander getting into reconstruction, which has higher ASPs and also China and the U.S., those should be accretive as well and also just help us run the business more efficiently as well as you look down the rest of the P&L. But for right now, we're investing in the future, and that's extremely important to us.

What about some of the opportunities that you saw through the pandemic to do things more digitally to work smarter? How is that going to linger and allow you to have some savings that maybe you wouldn't see -- have seen before?

Yes, absolutely. I think we -- it was helpful for us to think about the business in a lot of ways, us like other businesses, learned a lot during the pandemic, how to rightsize and be more efficient in your sort of core business activities. How much you're traveling, really where are you spending your dollars and making them even more meaningful than they were before. And I'm super proud of the team as a whole because across all departments, it's where I really saw collaboration coming together and really thinking about what is the best way to run this business and digitally, not only externally to the end consumer or the plastic surgeon, but also internally, we've utilized those mechanisms to run this business more efficiently because we're a global company. So a lot of those learnings and savings and thinking about where we're spending the money will remain, and it will be our new operating model going forward so that we can effectively take those dollars and use them on new innovation, of course, the clinical trials that we're running and thinking about Mia and that opportunity to be able to launch that.

Great. Fantastic. Well, this has been a great conversation. We're almost out of time. Maybe I'll just ask one more since you touched on it. We haven't spent time on it yet, which is on the recon side. So you're launching the Flora Tissue expander this year. Could you talk about how that's differentiated and how that could open up some opportunity for the company in that side of the market?

Yes. One of the most important complications in breast reconstruction is capsule contracture. It happens to as much as 48% in the clinical trials of the past. And with our surface technology, that has a very positive effect in the capsule contracture rates in breast recon. On top of that, that tissue expander has a differentiator in the RFID enablement. So we're using RFID to find the port instead of the traditional metal and magnets that were used in the past. Because of that, it is able to have an MRI during the procedure right now. If you have a traditional tissue expander, and they want to do an MRI because there's a remission or something, they have to take out that expander so that you can have an MRI. With this expander, that's not going to be a problem. So that's a fundamental change in the protocols. And of course, we're looking at other interesting things that can come from it, like, for instance, being able to have less radiation and more targeted radiation.

Understood. Great. Well, another nice differentiator for the company, and thanks a lot for all the time. It was fantastic to walk through the product opportunities that you have and to hear that the recovery is in full swing. So hopefully, that means a great rest of the year, and we look forward to catching up with you again really soon.

Thank you, Matt.

Thank you.

Great. Thanks. Take care.