Establishment Labs Q2 2023 Earnings Call Transcript

Quartr
Provided by Quartr
August 8, 2023

There are 10 speakers on the call.

Operator

To Establishment Labs Second Quarter 2023 Earnings Call. At this time, all participants will be in listen only mode. At the end of this call, we will open the line for the question and answer session and instructions will follow at that time. Conference. As a reminder, today's call is being recorded.

Operator

I will now turn the call over to Raj Denhoy, Chief Financial Officer. Please go ahead.

Speaker 1

Thank you, operator, and thank you everyone for joining us. Discuss our financial results. With me today is Juana H. Konekaros, our Chief Executive Officer. Following our prepared remarks, we'll take your questions.

Speaker 1

Before we begin, I would like to remind you that comments made by submit during this call, we will include forward looking statements within the meanings of federal securities laws. These include statements on Established Labs' discuss the financial outlook and the company's plans and timing for product development and sales. These forward looking statements are based on management's current expectations and involve risks and uncertainties. For discuss the principal risk factors and uncertainties that may affect our performance or cause actual results to differ materially from these statements. I encourage you to review our most recent annual and quarterly reports discuss our financial results on Form 10 ks and Form 10 Q as well as other SEC filings, which are available on our website at establisholabs.com.

Speaker 1

Please also note that Established Labs receives an investigational device exemption from the FDA for Motiva Implants and is undergoing a clinical trial to support regulatory approval in the United States. We continually seek to expand the geographies in which our products are regulatory approved. Please check with your local authorities for specific product availability. The content of this conference call contains time sensitive information accurate only as of the day of this live broadcast, August 8, 2023. Accept 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.

Speaker 1

With that, it is my pleasure to turn the call over to our CEO, Juan Jose.

Speaker 2

Thank you, Raj, and good afternoon, everyone. Revenue in the Q2 of 2023 totaled $48,600,000 an 18% increase open the Q2 of 2022 in a new quarterly record for our company. We are growing well in excess of our underlying markets And there are a number of positive catalysts we expect over the coming months, all of which is providing a strong foundation on which to build for 2024 be in a listen only mode. Raj will provide additional details on our Q2 performance and our outlook in a moment. On July 19, the 5 year anniversary of our listing as a public company, we held the grand opening of our Souleyeum Innovation for 400 people attended the event, including representatives of the Costa Rican government, plastic surgeons, distribute distributors from around the world, suppliers and other business partners.

Speaker 2

The new campus supports our have strategic plans with additional capacity and capabilities in R and D, manufacturing, digital media, training and medical education. This year, we will bring online approximately 35,000 square feet of new manufacturing and warehouse space that more than doubles our manufacturing capacity to over 1,500,000 units a year, which is about have the current global demand. We also have the ability to add an additional 45,000 square feet of manufacturing as our growth requires. Expand the market and create broad demand for our products. State of the art facility is designed to be carbon neutral use sustainable materials and other green design elements and standards throughout.

Speaker 2

Our goal was to build a center for creation and innovation where our employees, healthcare professionals and partners from all over the world can usher new standards for the future of plastic surgery. And with the opening of the Sulaome, we are certain we have succeeded. We are better positioned than we have ever been to create and expand new markets intend to make a meaningful change in the lives of women around the world. One of the most exciting near term opportunities for us is MiAfemtech. With the recent approval in Europe of the tools needed, the global rollout of this new category breast aesthetics is picking up base.

Speaker 2

Our launch activities are centered on creating these new category with our growing list of certified partner We are strengthening our pipeline of partner clinics with new centers in Japan, Spain, Switzerland, Sweden, Germany, England, Costa Rica and France with more requests every week to join. We have created branding and marketing programs localized for each market that are directed at creating and capturing consumer demand. In Spain, where we launched our first campaign in July, the 1st week saw us generate over 175 leads, 30 of which resulted in patients seeking appointments. Most importantly, 47% of these patients were not seeking a breast augmentation prior to learning about Mia. As a reminder, as part of the Mia experience, a plastic surgeon can shape the breast in a 15 minute minimally invasive procedure without the need for general anesthesia.

Speaker 2

The result is natural and discrete with a one to 2 cup proportionate result. The procedure requires minimal downtime with women returning to most activities the same day. By providing a solution that overcomes many of the obstacles of traditional breast augmentation, we are opening up a whole new group of women to breast aesthetics. It is still early in the launch of Mia, and we remain focused on bringing women into this new category of breast aesthetics as plastic see improved efficiency with our partner clinics benefiting from better economics. We are seeing early proof points that We can scale this new category with NIA into a multibillion dollar opportunity.

Speaker 2

In our Aesthetic Breast Weekend franchise, The rollout of our Motiva FluorA tissue expander continues. We developed FluorA to provide surgeons and the women who receive these devices better options. Despite 1 in 8 women developing breast cancer, tissue expanders before Fluora have seen little meaningful innovation in decades. Among the improvements in Fluura are a first of its kind RFID enabled port, which allows for MRI imaging with our artifacts conduct during the time an expander is used after mastectomy. By being non magnetic, FLAURA also opens new options for radiation oncology treatment.

Speaker 2

FluorA also features our patented cell friendly SmoothSilk Surface technology, which can offer improved patient comfort and healthy capsule formation. The market feedback is very positive and we are seeing an increasing number of clinical publications confirming the benefits of Florida. A recent publication out of Switzerland was the first in human study to confirm that FLORA does not affect conduct reconstruction with tissue expanders. The recent publication out of South Korea demonstrated that in radiotherapy planning The Motiva Flora with the nonmetallic RFID enabled port showed superior dosimetric results to the heart and lungs versus traditional metallic ports, potentially reducing side effects to these organs. Our FID port materials also reduce artifacts conduct a study on CT imaging compared to the metals used in conventional expanders.

Speaker 2

In another recently published paper, scientists at the Medical University of Innsbruck in Austria were able to confirm in a head to head study that FLORA provide much improved patient comfort and satisfaction in their breast reconstruction journeys compared to an FDA approved expander. As a global medical device company focused on women's health, Establishment Labs has the opportunity and the responsibility to improve breast reconstruction. Flora is only the first step in our aesthetic breast recon initiative, where Establishment Labs will offer tools and techniques discuss the aesthetic ideals to which they aspire. On China, we are actively preparing for the launch of Motiva with our distribution partner. We continue to make progress in the regulatory process expect to launch Motiva in this market later this year.

Speaker 2

We have been in active communication with our partners in China to close the final questions remaining before regulatory approval. In the U. S, the final module of our PMA was submitted to the FDA in the Q1 and the full PMA has now been accepted and is under review by the agency. The pace of activity and our interactions with the agency remain positive. Clinical sites around the country have now undergone their BiMO inspections, bring us closer in this process of approval.

Speaker 2

It is difficult to predict regulatory timelines, but nothing in the process thus far diminish our confidence that MONTYVA Implants will be available soon to women in the United States. I will now turn the call over to Raj.

Speaker 1

Thank Thank you, Juan Jose. Total revenue for the Q2 was $48,600,000 which was growth of 18%. From a regional perspective, sales in Europe, Middle East and Africa were 42% of the global total Asia Pacific 24% and Latin America made up the balance. Direct sales were approximately 37% of implant sales, all distributors made up the balance. Brazil, which is our single largest market globally accounted for approximately 14% of total quarterly Motiva sales.

Speaker 1

Our gross profit for the Q2 was $30,300,000 or 62.3 percent of revenue compared to 27,500,000 or 66.7 percent of revenue for the same period in 2022. Our gross profit in the 2nd quarter was negatively impacted by higher overhead and labor costs. Direct labor costs were higher in part from changes in foreign exchange rates between the U. S. Dollar and the Costa Rican Colon.

Speaker 1

As we report in U. S. Dollars, the Significant revaluation of the clone over the last year resulted in higher costs in the period. We are also absorbing the early start up costs for the training and certification of MEA clinics, which is reflected in cost of goods. Average selling prices in the Q2 were up from the Q1 of 2023 year over year, which confirms that we are providing increased value even while we continue to take market share.

Speaker 1

SG and A expenses for the 2nd quarter increased approximately $4,000,000 expect to $37,000,000 compared to $33,000,000 in the Q2 of 2022. The increase in SG and A in the 2nd quarter resulted in part from our investments discuss the progress we made in the future. We will continue to see the progress we made in the future. R and D expenses for the Q2 increased approximately $2,000,000 from the same quarter a year ago to $6,900,000 Higher personnel costs increase activity related to the U. S.

Speaker 1

Clinical trial contributed to the higher spending this period. Total operating expenses for the Q2 were $44,000,000 an increase of approximately $6,100,000 from the year ago period. Net loss from operations in the Q2 was $13,700,000 compare to a net loss of $10,400,000 in the same period in 2022. Our cash position as of June 30 was $90,200,000 compare to $66,400,000 at the end of 2022. Our cash position reflects the $1,265,000 share offer we completed in late April, as well as cash used in the Q2 that included approximately $9,000,000 of investment in CapEx, including for our new manufacturing facility, as well as the planned increase in inventories we prepare for the launches of Motiva in China and United States and further growth we expect in the near future.

Speaker 1

As a reminder, we have 2 remaining tranches on our debt facility, which total $50,000,000 and become available on the achievement of sales and regulatory milestones. These along with the cash we have on hand at the end of 2Q provide us with access to approximately $140,000,000 in capital. Under our current forecast, the cash we currently have on hand as well as the additional capital available to us under our credit facility will allow us to achieve cash flow profitability still funding our growth initiatives. We are maintaining our revenue guidance for 2023 in a range of $200,000,000 to 210,000,000 There are a couple of things to note in the cadence of revenue for the second half of the year. We expect approval of launch of Motiva in China in the Q4.

Speaker 1

Also EMEA launch in Europe in the summer months, which is a seasonally slower period. We expect EMEA consultations to begin in earnest in the Q3 have procedures to contribute more meaningfully in the Q4 of the year. Overall, we continue to see good momentum in the underlying business and we expect to have a very strong finish to the year. We expect gross margin in 2023 to be approximately 100 basis points lower than 2022, which reflects higher overhead and labor costs, the early cost of the global rollout of EMEA and the start up of manufacturing the new Cilium facility. We continue to see regular fluctuations in gross margin.

Speaker 1

However, the trend in our gross margin is expected to be positive over time. The prices we expect to realize for our products in the U. S. And China, which are the highest paying in the world, will provide a tailwind to our gross margins as we take share in these new markets. We continue to expect operating expenses as a percentage of revenue in 2023 to be similar to 2022.

Speaker 1

Operating spending over the near term is reflecting our investments in development and commercialization programs. However, we expect expenses as a percentage of revenue will trend down as we move into these initiatives begin to leverage our spending. I will now turn the call back to Juan Jose.

Speaker 2

Thank you, Raj. During the opening of the Soulta Yum campus, we held a discovery session as part of the program. The session highlighted the scientific and clinical foundations enjoy NIEF Emtek and FLORA, a redefining breast aesthetics and reconstruction and are driving the strong growth we are seeing globally. Beyond fundamentally changing the current landscape, the technologies behind them have provided platforms that we are now developing into new be taking the minimally invasive platform developed with Mia FEMTECH and are leveraging it into new minimally invasive aesthetic categories. The first of which is minimally invasive gluteal ergonomic modeling, which we call JEM.

Speaker 2

The market for gluteal augmentation in 2021 was estimated by ICEPS, the International Society of Aesthetic Plastic Surgeons to be 523,000 procedures globally, which is a 41% increase from just 4 years ago. Despite this strong demand, the current options are lacking with high rates of morbidity and even mortality. We have an initial IRB approved study underway and are encouraged by what we have seen so far. We are early in the development of this new product provide updates as we make progress. Since 2014, our implants have been available with an RFID sensor platform call QID.

Speaker 2

The passive privacy proven sensor provides identification information about the device, such as the serial number, date of manufacturing and others. 60% of our devices in the market now include the QID technology. And in many markets, women are selecting devices with QID 4:1 or more over non QID devices. We will soon introduce the next version of our sensor platform, which we are calling Zen. This new platform continues to be passive, but is nonmetallic and will add additional capabilities such as the measurement of temperature.

Speaker 2

This feature and in particular core temperature is a very useful biomarker. And with Zen, we have a device provide measurements in real time. Temperature is only the first of what we hope will be a suite of biomarkers enable by the Zen platform. GEM and Zen are just 2 of the many exciting things we are working on and the expanded capabilities in our new Surajama campus in research and development, medical education, media and manufacturing will enable us develop them to their full potential. We remain confident that the target we offered earlier this year of $500,000,000 in revenue be proven conservative.

Speaker 2

And with the continued contribution of our existing product portfolio and the growing contribution of new solutions like JEM and Zen, we believe that we will continue to grow at a healthy clip

Operator

and a confirmation tone will indicate your line is in the question please proceed with your questions.

Speaker 3

Hi, great. This is Patrick Young Li in for Matt. Thanks for taking our questions. I guess to start maybe on the China launch. I think you mentioned Q4, you're using the same distributor that you have been using in South Korea.

Speaker 3

And You can be replicating a lot of the Korea strategy for the China launch. I guess, since China is a DTC market, I was wondering how you think about the adoption curve, how China might be different versus

Speaker 2

Yes. Thank you. And I think it's important to remind everyone that China is the fastest growing breast aesthetics market in the world. And of course, we are super excited about this opportunity. Already in the countries around China, we've been doing a lot of activities create awareness about Motiva Implants and make them the implant of choice.

Speaker 2

We are market leaders in Japan, in Taiwan, in South Korea, in Vietnam and in Thailand, which tells you a lot how the Asian consumer has obtain the opportunity with Motiva as the implant of choice. Before the pandemic, we had around 25% of consumers in South Korea coming from China to get Motiva Implants. And when you look at the data coming from China, what you see is that patients request premium brands. The brand reputation is highly valued by hospitals and our market research shows That there is a good reception and great image to the Motiva brand. So we think that given the importance of this launch and everything that we are preparing with our partner, we will be successful in gaining the same type of traction that we've gained in the rest of Asia.

Speaker 3

All right. Excellent. My follow-up is on EMEA, very early in the launch, but wanted to hear a little bit about how you think the launch is going versus your expectations. Sounds like the Spanish experience is very positive so far confirm the market expanding opportunity. How is the Japan launch going?

Speaker 3

What

Speaker 2

Yes. Mia is just exciting breast harmonization new category. And what we are seeing is that this value proposition is opening breast aesthetics to a whole new group of women. Just to give you an example, what we are seeing, for instance, in Spain, where we launched our first campaign just last month, in 1 week, we had 175 leads And that led to 30 patients seeking appointments with clinics. But more importantly, 47 True new category and market expansion.

Speaker 2

We're strengthening the pipeline. We now have New clinics taking the certification process in place in Germany, in the United Kingdom And also in even Japan. Now it's early on, but it's very promising. In Japan, it will go slower for one very simple reason, compliance. We have to comply with many rules in Japan that are restrictive to us communicating directly to consumers.

Speaker 2

So it's going to take a little longer. There's going to be more word-of-mouth. But when we see the results, especially the outcomes for patients end the response to the experience. Of course, we feel like it's going to get there in terms of the patient

Operator

our next question is from the line of Anthony Petrone with Mizuho Group. Please proceed with your questions.

Speaker 4

Congrats on a strong quarter here and as well as for the opening in Costa Rica and thanks for hosting. It Great event. Maybe just pivoting to Motiva U. S. Clearance, obviously, the PMA is submitted here.

Speaker 4

Just wondering sort of the behind the scenes mechanics here. How many rounds of questioning Do you expect from FDA? And I would assume that there's no panel needed here, but I could be wrong. Is there any thoughts on the need for an advisory panel

Speaker 5

for clearance

Speaker 4

of Motiva in the U. S. And then I'll have a couple of follow ups.

Speaker 2

Yes. Thank you, Anthony. And it's important to know that we submitted the full PMA and was accepted review by the agency. We are trying to be very careful to keeping to the propriety of the trial by not disclosing too many details, but I can tell you some things that will give you some comfort regarding your question. About now all of our clinical sites around the country have now undergone the IMO inspections, which is bringing us closer to the approval.

Speaker 2

Also we had the 100th date meeting, which was held in June of this year and we're still waiting for the inspection of our manufacturing. But all of our interactions with the agency have been very collaborative and the level of interaction is great. So nothing at this point makes us think that there will be a panel.

Speaker 4

Okay. Okay. And then just a follow-up here. One would be On JEM unveiled at the Sur Leon campus opening, you mentioned, Juan Jose, 500 and 23,000 procedures globally. Just wondering if there's any pricing data you can share on gluteal implants relative to breast augmentation.

Speaker 4

And then one in there, I'll just sneak in for Raj. When we think of the new campus Manufacturing as that expands, but also as we layer in price from China, for instance, and possibly the How should we think about gross margin, let's say, over the next 2 years from the 2Q level? Thanks again and congrats on a good quarter.

Speaker 2

Well, first, the interest from consumers on Contour Aesthetics and in particular Glutal aesthetics has been increasing over the last few years. And when you look at that number, more than 500,000 procedures Of course, as a women's health company, we are looking to solve for the problems that we see in terms of safety and the quality of the outcomes. So what is the correct pricing for that procedure? I think we will know as we gather more data and we do more market research. But I think when you look at MIA as a premium procedure compare to traditional breast aesthetics.

Speaker 2

I think you can use a similar mindset to think about what JEM could be compare to traditional digital options.

Speaker 1

Hey, Anthony. So on the gross margin, we are absorbing Several things right now. As we noted in the prepared remarks, the Costa Rican Colon in particular has revalued about 25% in the 2nd quarter loan. So we're up against that headwind right now. But as we move out of this and into next year and we launch into China and then hopefully in the U.

Speaker 1

S. Very soon. The tailwind in our gross margins is going to be pretty meaningful. The pricing in those markets are the best in the world. And so we expect you're going to see a very nice improvement in our gross margin over the next couple of years.

Speaker 4

Thanks again.

Operator

Our next question is from the line of Joanne Wuensch with Citi. Please proceed with your question.

Speaker 6

Hey, good afternoon, guys. This is actually Anthony on for Joanne. Thank you for taking our questions. My first just on guidance since there's some moving pieces with the U. S.

Speaker 6

China launches. Can you just talk about what your assumptions are at the low end of guidance versus the high end of guidance? And then just had a follow-up. Thank you.

Speaker 1

Yes. Thanks for the question. It is there are a lot of swing factors for us over the balance of the year. We're thinking about the contribution from EMEA, of course, the China approval, which we talked about we're expecting in the Q4. And there's a lot of different ways that the year could unfold.

Speaker 1

Generally, we're comfortable with the entire range we provided, but it's just very difficult to pinpoint exactly where we'll fall given all these various dynamics at play.

Speaker 6

That's helpful. And then I thought the sort of information on Spain on the leads to consultation conversion was interesting. Do you know how many of those, I think it was 30 patients that sought out the knee appointments. Do you know how many actually moved on to get the

Speaker 2

Yes. Thank you. What I can tell you is that because it is summer, many of these potential patients are scheduling either the appointments or the procedure for after the summer break. In Europe and in particular in Spain, they take off the entire month of August. So part of what Raj was referring is indicative of the way we are looking at MIA.

Speaker 2

When we think about MIA, we see this amazing initial response that could transform itself into many appointments and potentially procedures. So as that ramps up, we expect to see more and more clinics coming in and that's what we want to see with the MIA launch.

Speaker 6

Great. Thank you.

Operator

Thank you. Our next question is from the line of Josh with Cowen and Company. Please proceed with your question.

Speaker 5

Good afternoon. Thanks for taking the questions. I wanted to start just on Joy plus and the ergonomics to implant premium pricing associated with that program and just to get a better understanding of The momentum this year in 2023 as new countries are getting approval and launching Joy plus And the pricing premium associated with that and how you see that ramping over the course of the next 6, 12, 24 months?

Speaker 2

So as we launch new exciting experiences like the one we have with Joy, Which is a program to promote the Ergonomix II platform. What we see is that once consumers understand the value proposition, they understand that upgrading to these type of offerings is worth the price premium. So more than 10% of the market in certain countries has been moving to joy for us. And that's very important, because it tells you that what we came into more than a decade ago, which was a commodity market, no longer is. And we've been able to shape that through technology end through the type of value propositions that Joy embodies.

Speaker 2

So still many countries that we need to go to with joy, but definitely super pleased about it. Further to that, I think it's important to recognize that although we are creating a lot of potential awareness and interest with MIA. Some of those patients are not suitable for MIA. So Joy becomes like the alternative for them that is high quality and close in the type of experience.

Speaker 5

Thanks for that. And I apologize for referencing that as Joy Plus and not just Joy. But wanted to follow-up on this topic. And you did unveil a development program for EMEA Plus down in Costa Rica at the Sumon grand opening. And wanted to just I think you've commented multiple times on the MIA launch so far, but just any signals that MIA or MIA Plus has the potential to cannibalize traditional breast augmentation procedures as well as you move forward with That Miya Plus development program.

Speaker 5

Thanks for taking the questions.

Speaker 2

So in all the market research that we have done over the last few years, What we have seen is that the market expansion comes from around half of the see consumers interested in Mia were not considering a breast augmentation before. The other half, We're considering it, but when they see MIA, it's appealing to them. Now given the significant difference in the price points for Establishment Labs. With Mia, I think it is a Quite positive development for the company. So either the expansion that we see in terms of new entrants to the category with Mia alone or the ones that are moving through the consideration phase and end up in EMEA, both be very positive for us.

Speaker 5

Thanks for that. If I could just sneak one more in for Raj, just on the FX impact in the quarter on the top line, any quantification you provide will be great. Sorry about that. Thank you.

Speaker 1

Yes. No problem, Josh. It was minimal in the quarter, not really worth calling out.

Speaker 5

Excellent. Appreciate it.

Operator

Our next question is from the line of Marie Thibault with BTIG. Please proceed with your questions.

Speaker 7

Hey, good afternoon, Wanoza and Raj. This is Sam Ybarra on for Marie. Thanks for taking the questions. Maybe I can ask my first question here on the cadence for the back half of the year. And Raj, I appreciate your comments and the prepared remarks.

Speaker 7

But In terms of seasonality here in Q3, is that something we should expect relatively in line with 2021 2022.

Speaker 1

We do expect seasonality, And I think one thing you're seeing probably in our numbers is that the amount of revenue going through distributors is also Right. And so as our distributors start to experience that seasonality as well, it becomes even more pronounced in our numbers. So we are expecting it's So we expect the dip in the 3rd quarter is probably a bit more pronounced than we've seen relative to the overall cadence of revenue for the year than we've seen in years past.

Speaker 7

Okay. That's helpful. I appreciate the comments. And maybe just a follow-up here on some of questions out of the initial Spain experience for Mia. In the past for typical breast augmentations, we've heard that it takes anywhere from months to a few years for our patients to decide to go through the procedure, but it sounds like with MEA that's potentially accelerating some of that conversion.

Speaker 7

Just wondering if that was something you think visit phenomenon that's maybe translatable to the broader market for EMEA.

Speaker 8

I think it's one of

Speaker 2

the most interesting things because the consideration phase in traditional breast augmentation tends to be around 4 to 8 years. So when you look at the group that was not interested in a traditional breast augmentation, That would signal that their cycle of decision making is made a lot easier by the fact that you are removing all these from the decision. And I think that's absolutely logical. And then when you look at the group that was considering a breast augmentation, What you see is that, Mia again is getting them through the finish line by removing the obstacles that they were looking at.

Speaker 7

Thanks for taking the questions.

Speaker 2

Thank you.

Operator

Our next question is from the line of Neil Chatterjee with B. Riley. Please proceed with your questions.

Speaker 8

Yes. Good afternoon and thanks for taking our questions. Maybe just sticking with Mia, you've touched on Spain. Just curious how That kind of initial experience is maybe similar across the other European countries or centers. And if not, if there's any other anecdotal feedback you've gotten from those centers.

Speaker 2

Yes. I think what we are seeing is that these clinics that have moved from certification to actually launching are getting a lot of interest from potential consumers. Now the summer months did get in the middle of this, but I think what we expect is that many of these potential consumers once they go and get their consultations will make a decision to go ahead with Mia. So just to let you know, we have also added Another chain of clinics in Japan. We've added 2 high premium Clinics in Germany and we're adding more as the summer progresses.

Speaker 2

So I think that's really good for us because not potentially fill that interest.

Speaker 8

Great. And then just one follow-up here for me. I think you talked about kind of the ASP Being up, I think sequentially year over year, just curious if there's any nuances or dynamics to think about for the various International

Speaker 1

regions. Hey, Neil. No, I think it's kind of a reflection of a number of things, right? I mean, we are As the earlier question noted, we're seeing Joy start to get more utilization. That's a higher priced product for us.

Speaker 1

We've taken a little bit of price in a number of our markets. It really reflects the value that we're bringing with the products that we're taking to market. And so I'd say it's really a combination of again that mix And then the pure price we're seeing and overall we're pretty pleased at how things are progressing there.

Speaker 8

Great. That's it for me. Thanks.

Operator

Thank you. The next question is from the line of George Sellers with Stephens. Please proceed with your questions.

Speaker 9

Hey, good afternoon and thanks for taking my question. I apologize if I missed this. I'm hopping from a few calls. But I was just curious if you could give some color on maybe what you're expecting in contribution within the guidance from China. I'm not sure if you've specifically quantified that, but obviously that approval has been a little bit slower than we'd expected and just curious if that's a potential headwind or risk to the guidance

Speaker 1

Hey, George. We're not going to provide specifics around the number, right, the amount of revenue we expect from China for competitive and other reasons. Our level of confidence and approval this year is very high. We continue to work with our partner in China and answer the last few questions that we've received. As I noted on earlier question, there's just a number of different ways that the year can play out With the contribution from EMEA, with China approval.

Speaker 1

And so again, we're comfortable with the entire range we've given and it's just really difficult to pinpoint where exactly we're going to fall within that.

Speaker 9

Okay. That's totally understandable. And then maybe switching to EMEA. You've announced 14 partnerships so far. I'm just curious how you're thinking about that playing out the rest of this year, sign up faster or if this is maybe a purposeful slower rollout and sort of picking and choosing the best partners at this stage.

Speaker 2

No, absolutely. I think what we're trying to do is accelerate the number of premium partner clinics that we bring on board in Europe. And I think there's still a lot of space for us So I think the importance is that as we move through this and month by month we've been seeing it, we learn more and more what works In terms of creating awareness and what is most efficient. So clinics that come later on will benefit from those learnings.

Speaker 9

Okay, great. Thanks for the time again. I appreciate it.

Operator

Thank you. This is all the time we have for questions today. I'll turn the call back over to Juan take Juan Jose Chirios Grosso, please proceed with your closing comments.

Speaker 2

Thank you for joining us on today's call. We look forward to providing our next quarterly update in November And we wish everyone continued good health and happiness.

Operator

Thank you. This will conclude today's conference. You may disconnect your lines at this time and thank you for your participation.

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Earnings Conference Call
Establishment Labs Q2 2023
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