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

All right. Good morning, everyone. I'm Jamie Perse, health care provider analyst at Goldman Sachs. And [still in] on another med tech panel. We've got establishment labs here for this next panel and Raj Denhoy, CFO. Thank you for joining.

Thank you, Jamie. And I should say also that Juan Jose, our CEO was supposed to be here, but he sends his regrets. He came down with something over the weekend and felt it was best not to travel, but thank you for having us.

[Well I]Hope he is feeling better soon. Maybe just starting with recent results. First quarter was very strong we can kind of go around the world, which drove the different dynamics, strength in APAC maybe is a good place to start. What do you see in the APAC region that drove the strength? .

Sure. I think generally, you've probably seen in our results the last couple of years, even going back beyond that, that we continue to post very strong results globally, well in excess of the underlying markets as we continue to take share in most of the markets around the world with our technologies. You noted in the most recent quarter, Asia Pacific was a bit stronger. And I think what we've seen out of Asia over the last year is that against the comp a year ago, we were probably still seeing a bit of recovery coming out of COVID. And we've seen some of the distributors in the markets in Asia continue to sort of recover from that period. And so we have seen good results there and expect to continue to see them.

Was there anything unique about 1Q catch up or pull forward that makes the growth that you saw in APAC [indiscernible] not sustainable. I guess the comp was easier. So adjusting for that, anything that was unique this quarter?

I think it's probably what we were just talking about. We probably have seen a little bit again of kind of a recovery in that region. I think COVID lingered there perhaps longer than some other markets. And -- but I think the underlying trend again that sort of started with, with the share taken globally and the technology that we have, the ability to continue to outgrow our markets is still there. We'll see kind of puts and takes, obviously, in different markets as they're under kind of different dynamics. Asia for us is a distributor region. So our markets there are pretty much all serviced by distributors. And so again, you have ordering patterns there, which are different quarter in and quarter out. But again, it gets back to just the strong results we're seeing globally.

Okay. And Europe also strong in the first quarter. There too, maybe you can just give us a little bit of color on what you're seeing if there's any change in underlying patient demand or that's driving the strength?

No, Europe you're right. It was a good quarter for us, teens growth out of Europe. Again, well in excess of the market growth you would expect to see in that region. Europe is a bit unique in that it is predominantly a direct market for us as opposed to Asia, which is more a distributor. And so it's kind of a reflection again of kind of the underlying demand for our technologies. I'm kind of struggling to come up with an explanation other than the technology is capturing share, and we continue to see kind of good demand from surgeons to use our products, driven a lot by patient demand. And so the dynamic there is, again, similar to what we're seeing around the world in that -- there's a lot of demand for our technologies right now.

Yes. Absolutely. LatAm took a little bit of a step back, maybe we can hit that region next. How much of that was currency pressure versus change in underlying demand? We're obviously focused on sort of the underlying trends of [indiscernible].

Sure. Sure. Sure. I think the biggest market is Brazil for us in Latin America. And Brazil has been under some economic pressure recently. They had a change in government there. There's been some pressure on the economy. And so I think the market as a whole has been a bit slower in Brazil. I think what we can gather our share position there remains very strong. We have not lost market share. We continue to gain share, we think. But there is a little bit of underlying pressure in Brazil in particular.

Do you -- what are you seeing more broadly just in terms of the economic uncertainty and consumers may be changing where they allocate their dollars to. Are there regions like Brazil and other parts of the world that maybe have some risk if things deteriorate further? What are you just seeing out there broadly?

Yes. I think what we've generally seen in our markets and commenting through the first quarter, which we haven't given any updates here in the second quarter, breast augmentation, breast reconstruction is a remarkably resilient category. When women make the decision to move forward with these types of procedures, they generally go through with them. That's not to say that we are somehow immune to changes in consumer behavior or that if things shift that it wouldn't impact this industry. But thus far, we have not seen much impact. But I would tell you, for us internally, it's the area that we continue to focus perhaps not most on, but certainly aggressively on because it is sort of outside of our control and sort of trying to read the [tea leaves] like everybody else in terms of whether consumer behavior is shifting, whether people are choosing to spend money in different ways. All of that is sort of very much top of mind if we continue to track it. And again, through the first quarter. And as you've seen over the last several years for us, it's a remarkably resilient category.

Let's go to China. I'm sure you expected this question. But the middle of June, we're still watching for the an NPA approval. You expressed confidence recently publicly. What gives you that confidence? And -- where are we in terms of proximity to potential approval?

Yes. Again, we remain extremely confident that we'll be launching into China this year. What gives us the confidence is the feedback we continue to get from our consultants on the ground, our distributor in that market. So China is coming, and we're preparing for that launch with some urgency. .

At what point, if a month from now or we get into August, September, I mean at what point would it start to impact what's embedded in guidance? .

Yes. So we have included China in the guidance. And again, we provide some risk adjustment to the various things we put in there. So there's a range that is contemplated within what we could do in China in the $200 million to $210 million guidance that we've given this year. Again, we're extremely confident that we will be generating revenue out of China this year. And it's also important to note that it is a distributor market for us, right? And so the ordering patterns will be much like a distributor where we'll see a stocking order from that distributor initially. And so we don't view it right now as being any sort of risk to our guidance.

Are you seeing any of that stocking yet? Or will that come after the year?

It will come post the approval. We can't sell anything into the country until we get approval. .

Okay. How are you more broadly preparing for that launch? And how should we think about how long it will take to get up to a healthy ramp?

So, the distributor we're using in China is the same group that sells our products in South Korea. And we have the dominant market share in Korea. And so the broader plan is to replicate a lot of what we've done in that market. And so China is a market where you can do a lot of direct-to-consumer activity, it's a market where Motiva, our branded implants is perceived as a luxury brand. As I mentioned, we have dominant shares in Korea, in Japan, in Taiwan, all of the surrounding markets. And so when we get to China, a lot of it will be sort of replicating what we have done in the markets that have surrounded and we're using the same partner. We will, of course, provide support from the marketing side and from the materials that are provided into that market that, that distributors uses, but essentially, it's going to be a lot of what we've done in other markets. And that's what gives us a lot of confidence that as we go into that market, we'll do well. And when we think about the markets where we have done, I think, where we've achieved success perhaps faster than others, it tends to be markets where you can communicate directly with the patients, right? There are certain markets, Brazil, France, where direct-to-consumer marketing is not permitted. China is not a market like that. And so given the perceptions, again, already of our implants there and our ability to communicate directly with patients there, we think we'll do well.

So just on that note, I mean, what's the marketing plans around reaching patients and driving that ramp?

Yes. So again, it's -- a lot of those on the ground activities are controlled by that distribution partner. And so for us to comment on that strategy, it's really up to that party to execute on that.

Okay. What are your latest views on just how important this market is for you? How large it could 3 to 5 years from now? -- for a company.

So China is the third largest market in terms of procedures, but it's the second largest market in terms of revenue. And notwithstanding COVID and some of the hits that the market took there, it is still viewed as one of the fastest-growing markets in the world. And so for us to be there and for our brand to be available there is very important. When one thinks about the markets that we don't currently compete in, it's China and the United States. I mean those are the 2 biggest markets in the world, and we are poised now to enter both of those in short order. So it's important -- it's an important market. Important for us to be there.

And you touched on this a moment ago, just the pricing capability in China being a luxury market. You said it was the second largest by revenue, third by procedure that implies that pricing premium. How are you thinking about pricing strategy? How should we think about the price relative to your existing base today and how accretive it might be?

Yes, there are -- there's a segment of the Chinese market that pays prices that are higher than really anywhere else in the world. So a really kind of a premium luxury segment in that market and the ability to command higher prices in that segment are real. And so we think we have the potential to realize pricing perhaps better than even in the United States in certain segments of that market. . You asked the question on pricing. Given the differential performance of our implants relative to our competitors, the data we've amassed behind our technologies, really just the improvement over what is currently available on the market, we typically command a premium in most markets that we're in. And so China will be no different than that realistically. And so we haven't communicated or as our partner there in terms of the actual pricing strategy and what we will charge for these products there. But there's no reason to think it will be different than anywhere else.

Okay. Let's go to EMEA and your launch in Japan. I mean what are you starting to see in terms of adoption? You've got a couple of these partnerships in place. What -- what are you seeing so far in commercial results there?

So it's still very early with Mia, right? It's been about 2 months now that we have launched into Japan. There are commercial cases being done there. I think it's still too early to really report a lot on the types of patients or what they're seeing. As you appreciate, it is a very different category, right? We are positioning it as a completely different offering within breast aesthetics. And so it is being marketed that way. The consumer-focused activities are all geared towards brand creation and positioning it as a whole unique offering, right? And it takes time for that to build, right, for patients to start to see those messages for the resonance of those messages to start to build as soon as we are able to start to communicate more about what we're seeing there, again, the types of patients, the experiences that they're having, the prices that they're paying all these sorts of metrics, we will do so, but it's just too premature right now.

Okay. Fair enough. I guess what gives you confidence this will be market expanding and kind of reach new patients that wouldn't have gone another route.

Right. It's really driven by, one, the experience, right, that we have seen in the markets and Japan was the real impetus to the development of Mia, right, where there is a lot of -- there are a lot of women in the Japanese market who express a desire to do something around breast aesthetics, but have been unwilling to do something that is implant-based or surgical-based. And that was really, again, the origins of Mia as a concept and as a product offering. What builds upon that is all the market research we've done. So every market in which we are going into, we have done extensive research around the activities that women or the behaviors of women in those markets, what they're looking for in these types of procedures. And in general, what we've seen is that there are approximately 10x as many women who are interested in a technology like Mia relative to existing breast augmentation offerings. Typically 3 quarters, if not slightly more than that of those women would not consider traditional breast augmentation and they're willing to pay on average twice as much for those procedures. And so when offered a solution like Mia, which is minimally invasive, which doesn't require any anesthesia where the procedure can be done in less than 15 minutes. The patient is in and out of the clinic in less than 90 minutes. In many cases, they're going back to their normal activities that same day, having dinner with their friends, going back to work relatively soon after that. And so when offered a procedure, a product like that, it has a lot of resonance with women. And again, it's still early in terms of the actual feedback we're getting from the marketplace. But so far, everything we've seen in the research we've done is really supportive of this being a really big category.

I know it's early in the commercial launch of these partners you have in place in Japan. But what's next? How should we think about adding incremental partners and also, how will you evolve the marketing approach over time as it were you need to kind of really scale up ahead of commercial success that ties to margins will kind of come back to that? But how should we think about the evolution of the marketing plans and how much of that's tied to the commercial success?

Yes. So that's what I was getting at, Mia really is a different category, right? And so really, what we're focused on is building out this new category within breast aesthetics. And so the model doesn't involve a lot of sales reps. We're not selling it to every plastic surgeon. It's based upon having a few dedicated clinics that offer Mia and offer the experience around Mia. It involves us creating that demand and creating that awareness of Mia. Certainly, the clinics are doing it as well, but then offering a premium experience to those patients that choose to get Mia. And so you've seen in some of the public press releases we put out around in Japan, we have 2 clinic partners, which are offering it at 4 clinics in Japan currently. We have a handful of clinics in Europe now that have already signed up to do this. But the model is not to make this available to every clinic initially. It's about, again, finding those partners who are committed to doing this in an efficient and a premium way for these patients because as we've shown in some of the work we've done around the economics of Mia. When clinics can do this in an efficient way, the economics that it unleashes for them are pretty significant. When we think about the idea of being able to do these procedures in less than 15 minutes, if the patients are available, if the clinic can set themselves up in a way that they can do 10 of these in less than 5 hours, which we've shown is possible given the price points that they can charge for this, the economics of them become very significant. So they create a lot of value for themselves. Patients are driving a lot of value from this. We, as a company, drive a lot of value from this. And so if we can create that category and create it in a way that preserves the value for all the various partners along the way. It could be very significant undertaking.

I guess 2 follow-ups on that. First, how much [indiscernible] do these 2 existing partnerships give you in terms of your growth aspirations? and can they kind of fulfill your appetite for growth with Mia in that market for the next 1 to 2 years? Or -- and then second, which is related to that, when you look across the market, how many other similar high-quality partners are there in Japan that you look at and you say, we want to partner with you maybe that 6 or 12 months down the road, but yes, those 2 questions.

There are other partners coming. We won't give a lot of detail around that, but there will be more. I mean, if the demand for this and the procedure volume for this is what we think it can be, we're going to need more partners. And so we're already in conversations with more. In Europe, you've seen we've signed up 5 clinic partners at this point in 4 different countries, there will be more there as well. That's just the initial launch. And so -- so we're just getting started. Again, we launched in Japan basically 2 months ago. We just put out the press release a couple of weeks ago about being able to launch into Europe. And so we're at the very, very early stages of this.

Let's go to Europe. How should we think about differences in the ramp in Japan versus Europe, the different elements of the market that will kind of drive these markets maybe in different ways?

In a lot of ways, the model is the same, right? So it's this idea again of category creation of creating a different category within breast aesthetics, a different customer that appeals to doing that type of marketing activity locally in those markets. Those activities are replicated in each of the markets in which we go into, setting up the clinics in a way that again offers that premium experience to patients. It is very reproducible, right? And we are doing it in a sort of stage and stepwise fashion, learning as we go. As we start to collect that information, which you've been asking about, we'll start to share it with other potential clinic partners, certainly share with the investment community. But as we've talked about, I mean, the real beauty of Mia in some respects is this market expansive nature of it, right, that there are multiples more women that are interested potentially in breast aesthetics than are currently doing something surgically about it. And if you can offer a technology, a procedure to that group that overcomes some of the apprehensions they might have about it, it opens up a whole new segment of this population. And given the price points that we are charging and the amounts that clinics are charging to the patients and really the value that women are getting from, it just -- it opens up a whole new market within breast aesthetics that has thus far been untapped.

Can you remind us where your partnerships are today in terms of -- in geographic regions, countries? And then what's next high on the priority list in terms of markets you feel you need to be in there? I realize it's really focused on finding the right clinical partner. But are there countries that you're especially focused on finding [those] partners? .

Well, we're looking with the opening -- with the CE Mark approval, it opens up all CE Marked countries now, right? And so we've initially talked about clinics in Switzerland, Sweden, Spain and France. So those are the initial partners that we're launching with. The partner we have in France has about 12 clinics spread across France. And so it opens up a whole network of clinics there. But it will be primarily focused on those European markets. For a period of time, Japan, we're launching too, and we'll continue to expand from there.

Okay. Okay. Let's go to the U.S. ID. You recently published your 3-year results -- how does this change your confidence in an FDA approval? And just what's your latest kind of communication with FDA in terms of, again, instilling that confidence?

Sure. And I should [indiscernible] by saying that we've tried to communicate that we're going to be very disciplined about what we share around the FDA process, right? We remain very confident in the approvability of what we submitted. We just want to let the process play out without being burdened by us creating expectation or sharing information and those sorts of things. Really sort of us not sharing anything should be viewed as progress, right? And if there's something to disclose, we will certainly do so. But, what we said all along is that you've seen the data now at 3 years, we have 3 million implants we sold globally. There's a consistency of the data that we've seen in registries and our own data in published literature about the performance of these products. And so we have a high level of confidence that we will be approved in the United States. The timing around that is sort of [a noble] and we don't want to create expectations around it. But again, I would express our confidence as remaining very high. You asked about the 3-year data. Again, it was just really a confirmation of what we have seen out of the data we've been showing for the last dozen years.

Let's talk a little bit about just the go-to-market strategy in the U.S., big market, like you said, the largest market in the world, how should we think about just what you're doing now to prepare for launch, what you'll be doing over the next 6 months? And what the strategy really is around the U.S.?

Sure. So obviously, for competitive reasons, we're not going to share a lot about our go-to-market strategy and what we'll actually do when we get launched here and those types of things. But we are preparing, right? So you think about things around logistics and back office, putting finance processes and people in place. Those are the types of activities that we are undertaking now, sort of more of the foundational work to support a direct to market, which the U.S. will be. as we get closer to U.S. launch and getting through the regulatory process, we'll start to stand at more of the commercial activity, but we're preparing. And we're getting ready for that eventual launch here in the United States.

How are you balancing putting more infrastructure, more sales reps in place ahead of that, that obviously has dollars attached to it versus just being ready to go hit the ground running, day 1?

Yes. So we'll do all of that foundational preparation work ahead of that commercial launch. And as we're getting closer to launching is when you start to stand up that commercial organization in a bigger way. So hiring all of the sales reps, those types of activities will happen when we get closer. The reality is, [indiscernible] the product is not approved in the United States, there's not much we can do from a commercial standpoint. We can't promote the product nor would we, it's not approved in the United States. -- but we can do all the activity to prepare for when we eventually get that approval.

Anything you can say about your pricing strategy and where you think pricing will shake out in the U.S. And again same question about China, just how accretive it is to your existing points today?

Yes. So again, we haven't shared a lot around the ultimate strategy, including around pricing, but I can offer that in most of the markets that we sell in, we charge a premium to our competitors in those markets. And it's likely we will continue to do that. But the reality is also that the U.S. market and the Chinese markets you mentioned are amongst the highest paying markets in the world. The ASPs in the United States are higher than pretty much any other market. And so we'll be right there as well. So it will pull up our overall ASPs as a company .

I want to ask about market share expectations in the U.S., which you won't answer, I'm sure. So maybe you can just look around the world, look at other markets and where you've gotten to in terms of market share and what similarities or differences would you draw between those examples and the U.S. just as a kind of reference point.

Yes. So we've publicly commented that we aspirationally believe we should be north of 50% in every market that we're in. We should be the dominant company in this space given the differentiated nature of what we're bringing to the market, the U.S. market is no different than that. In some respects, the U.S. has not seen a new implant approved here for a decade. It's a market which is predominantly smooth. So the surgeons here used to using smooth implants, which ours is [indiscernible]. It's a market where you can do direct-to-consumer marketing and communication. But it's also the largest market in the world, and you have competitors here who were not just going to give the market away to us, right? So we're preparing for all of that. So we're getting ready.

Okay. Can you share anything additional on just pathways for Mia in the U.S.? You've talked about PMA supplement and if that's not available, what are their alternatives? What does that do to time lines? .

So our U.S. approval is for our round and ergonomix family of implants. We basically sell 3 major families of implants, round ergonomix and now ergonomix too. All of them share the same safety features, the same construction. There's no sacrifice anybody makes in choosing any of those implants. As you move from round to Ergonomix to Ergonomix2 , the implants are softer, they move more naturally. Ergonomix2 is the most recent implant that we've launched. And that is also the basis of Mia. So it's the Ergonomix2 family. Again, what we are getting approved initially in the United States is round and ergonomix. And so we will have to get the Ergonomix2 implant approved. How we do that is the question, whether it's a PMA supplement or some other activity we need to do -- and frankly, we have not broached that subject yet with the FDA. We're really spending all of our airtime with them right now on the approval of our first implants. And so I would say stay tuned. Once we have more to offer and we learn more, we'll certainly share that, but that's the path we're going to have to go on.

Let's go to Flora for a minute. You said this is sort of your first step in breast recon. What's next, I guess? I mean, just give us a sense of what you're working on and what the pipeline is behind Flora.

Sure. So -- so Flora, we launched a couple of years ago now. It is our first real offering in breast reconstruction. So Flora is a completely nonmagnetic tissue expander, it has certain benefits relative to what's currently available on the market. It's MRI compatible. It's a very soft implant. It uses our same surface technology, same chemistries. There was a study published recently out of the University of [indiscernible] comparing our tissue expander to another commercially available tissue expander, where the researchers in the study randomly put our implant and the competitors implant in the same patients, and they were able to sort of directly compare how the implants performed. And overwhelmingly, our implants were redeemed to be more comfortable, softer. There was other clinical advantages to the implants. And so there's a lot of reasons to believe that this expander will continue to do quite well. But it really is the basis of, as you described, this push into breast reconstruction, where offering better technologies, pushing on awareness and access, we believe we can actually start to make these technologies available and used by more and more women. Globally, reconstruction is about 1/4 of the breast implant market globally. But if you look at how that market splits, the vast majority of it is in the United States. And so there are many countries around the world where women either because of access issues or other reasons are not able or choose not to get breast reconstruction using technologies like ours. So can we change that dynamic is the question. And it will take a long time, but if you can push on access and awareness and education is their ability to change those dynamics, and that's really what the aesthetic breast recon initiative is all about.

What are you seeing competitively? I mean, there's some large competitors in the space. They've exited some markets. Just what are you seeing broadly on the competitive front in key regions? Any changes happening that you'd flag?

Sure. We're never dismissive of our competitors, but the reality is that there's not a lot of innovation happening in this market other than what Establishment Labs is bringing to market. And so what we're seeing again is our competitors competing on price and other factors and us trying to change the equation and the dialogue around these products to push it more towards data, towards outcomes. And it takes time. But as you've seen in our results and you continue to see we're achieving success in that. And thus far, we haven't really seen a lot of true innovative technology that is coming from our competitors. But again, we're not dismissive or not acknowledging of them as being out there. We're just, I think, kind of trying to do this differently.

Good, see if I should probably ask you a few financial questions. So how do you expect to maintain the margin profile? I mean, you've got a lot going on in preparing for launches in the early stages of launches in Japan. -- seems like a lot you could spend on to further the growth profile. How do you balance all that and expect to maintain the margin profile?

Well, there's a couple of angles to that, right? So certainly on the gross margin side, right? We have some puts and takes this year around, we're standing up a brand-new facility in Costa Rica, which more than doubles our capacity. provides us with the ability to produce half the global market demand for breast implants. And so we're very excited about what that facility is bringing online for us. The initial standup phases of that, it will probably be a little bit detrimental to our gross margins. . But on the other side, we have everything you've been talking about, things like Mia, China, eventually the U.S. These are all ASP-accretive endeavors for us. So as those become a bigger part of what we're doing, you'll see a natural tailwind to our gross margin. On the operating expense side, we have been pretty clear that this year and into next year are not years where people should expect much leverage from us. When 1 thinks about operating expenses as a percentage of revenue, we're not expecting to show much change. despite the top line growing nicely for us in the next couple of years. And the primary reason is, as you've described, we're investing in these new opportunities. So things like Mia, right, spending on that in the early days, preparing for the United States. But as we get deeper into those launches, the leverage in this model should start to become pretty apparent. And again, you see that gross margin going higher and those operating expenses start to leverage we should start to move to a period where, again, that overall leverage in the model becomes much more apparent.

You mentioned the new facility coming online. How should we think about what scale you need to get that to -- get back to flattish growth margins, it will be initially dilutive, but how long will it take to get back to flat gross margin? And where can it just a pretty large facility in terms of capacity. Where can it take gross margins longer term?

Yes. I think for us, you'll probably see gross margin start to improve as we get into next year. And again, there's that dynamic of these ASP accretive endeavors happening and then the improvement of our underlying cost of manufacturing be driven by this new facility. But as we move into 2024 is when you'll start to see the gross margin pick up again, I'm sorry, what was the second part of your question?

Just the -- where gross margins.

[Working] over time. I think we believe we can get into the mid-70s over time from the mid-60s where we are now.

Longer term, I mean, the path to achieving the $500 million revenue target in 2026. You said it's not linear. So how should we think about what that ramp looks like, the key catalysts along the way?

Yes. So it's all the things we've been talking about, right? When you think about that $500 million target in 2026, there are a lot of ways to get there for us as a company, right? And there are also a lot of unknowns. I mean Mia, we have really high expectations, but how quickly that develops over that period of time. Certainly, the U.S. is in there, breast-reconstruction building for us. But we internally, and we've commented about this before, we view that target as somewhat conservative. If these things come together as we think they will, we will do better than that. But you asked about the inflection points. I mean things like the U.S. approval certainly is the big one, right? which is coming, we hope soon. And so we'll see how it plays out, but we have a high level of confidence in getting that $500 million target.

Okay. Just on guidance, I mean, we talked about the quarter a strong start to the year. Guidance was left unchanged. I mean I get it it's early in the year, but what kind of led you to the decision to keep guidance unchanged versus maybe incrementally moving it higher?

Yes, I think it's -- there's still uncertainty around the timing of some of these approvals. I mean you mentioned China, Mia is just ramping. And so there's some -- we've allowed ourselves some cushion in terms of how these play out over the balance of the year, and it's primarily that, just the timing of some of these initiatives that we've included in the guidance.

And how much China revenue is in guidance for this year? .

Again, we haven't provided numbers around that. It's in there modestly as is Mia. The predominant driver of our growth will continue to be underlying market share gains in the markets that we are in.

And is the confidence around hitting your whatever is in guidance for China this year, the fact that there'll be initial stocking orders. And so I know if it comes a little later, you have a bolus of orders just -- is that the right way to think about it?

I mean we have a partner there, right? And so that partner will buy inventory to prepare as they plan for that market. So yes.

Okay. Last one, just balance sheet liquidity position. Do you feel like you have enough capital to fund all this that's going on and feel pretty good about that.

Yes. With the capital raise, we did a little over, I guess, 1.5 months ago now, we have access now to about $175 million of capital to fund this business, and that includes the cash we had at the end of the first quarter. what we raised and some additional tranches we have available to us under our debt facility. And so as we think about all the things we have coming up over the next few years, we are now well funded to execute against those and to really drive the growth, which I think people are expecting we can do.

Perfect. Well, I think with that, we're out of time. Thank you, Raj, and thank you, everyone, for joining.

Yes. Thank you, appreciate it.