What Establishment Labs (ESTA) Said on Its Q3 Earnings Call

Key Points

• Establishment Labs reported strong third-quarter growth, with revenue up 33.9% year over year to $72 million, U.S. revenue up 119%, and first-ever positive free cash flow of $5.1 million. Adjusted EBITDA rose to $6.4 million, while the company ended the quarter with $75.8 million in cash.
• The company raised its 2026 revenue outlook to more than $274 million and expects 25% growth in 2027. Growth is being supported by U.S. market-share gains, higher utilization among existing surgeons, and strong adoption of minimally invasive products, whose quarterly revenue increased 124% to about $9 million.
• Management continues preparing for potential FDA approval of Motiva implants for breast reconstruction, now expected near the end of 2026 or early 2027. The company expanded its U.S. sales force and hospital infrastructure, but said any reconstruction revenue would likely be concentrated in the second half of 2027.

Establishment Labs NASDAQ: ESTA reported third-quarter revenue growth of 33.9% year over year to $72 million, driven by U.S. market-share gains and expansion across international markets, while the company generated positive free cash flow for the first time in its history.

Chief Executive Officer Peter Caldini said the company’s U.S. revenue rose 119% to $26 million, while revenue outside the United States increased 9.7% to $46 million. The company also raised its full-year 2026 revenue outlook to more than $274 million, from a prior range of $269 million to $271 million, and said it expects 25% revenue growth in 2027.

Profitability and Cash Flow Improve

Establishment Labs reported adjusted EBITDA of $6.4 million for the third quarter, compared with $1.2 million in the year-earlier period. Adjusted EBITDA margin expanded to 8.9% from 2.2% a year earlier.

On a GAAP basis, EBITDA was a loss of $0.9 million, an improvement from a $2.2 million loss in the prior-year quarter. The company’s preliminary net loss was $10.7 million, or $0.35 per share, compared with a loss of $11.1 million, or $0.38 per share, a year ago.

Chief Financial Officer Sandra Harris said the company generated $7.7 million in operating cash flow and $5.1 million in free cash flow during the quarter. “This milestone reflects strong revenue growth, improving profitability, and our continued focus on working capital management,” Harris said.

The company ended the quarter with $75.8 million in cash and cash equivalents. Harris also noted that the payment-in-kind interest provision in the company’s refinanced debt facility provides more than $5 million in quarterly cash-interest savings during the initial PIK period.

Establishment Labs said it expects to sustain positive cash generation and is targeting positive free cash flow for the full 2027 fiscal year.

U.S. Adoption and Minimally Invasive Growth

The company ended the quarter with 2,100 U.S. accounts and said its commercial focus is increasingly shifting from adding accounts to increasing utilization within its existing surgeon base. Caldini said Motiva represented an average of 43% of implant procedures among surveyed surgeons reporting Motiva use, indicating further opportunity to expand usage.

According to the company, 85% of accounts that ordered Motiva in the second quarter reordered in the third quarter. Establishment Labs estimated it had about 30% share of the U.S. augmentation market exiting September.

The company’s minimally invasive platform, including Preservé and Mia, generated about $9 million in third-quarter revenue, up 124% from a year earlier. The platform represented approximately 15% of year-to-date revenue. Establishment Labs raised its full-year minimally invasive revenue expectation to more than $40 million, from prior guidance of more than $35 million.

Sequential minimally invasive revenue declined due to typical summer seasonality in the company’s direct European markets, management said. Outside the U.S., minimally invasive revenue rose 16% year over year, and nearly half of new European accounts during the quarter started with minimally invasive offerings, according to Caldini.

Preservé accounted for approximately 17% of U.S. revenue in the quarter. More than 400 surgeons had been trained on the procedure by quarter-end, with the company expecting 500 surgeons trained by year-end. In a survey of 78 Preservé-trained surgeons cited by management, respondents said about 22% of their augmentation procedures had shifted to Preservé, while 95% reported being satisfied or very satisfied.

Establishment Labs said an October FDA approval of additional Motiva implant sizes, including sizes as small as 105 cc, is expected to support commercial availability before year-end. Caldini said the newly approved smaller sizes historically represent about 10% of the U.S. market. The company also plans to expand Mia sizes globally to up to 300 cc and Preservé sizes to up to 380 cc.

International Performance and Margin Mix

Revenue from direct markets outside the U.S. increased 16% year over year, led by Europe, including Italy, the United Kingdom and Germany. Management said international markets have generally remained stable, though conflict in the Middle East has affected demand and the company’s performance in that region.

Distributor markets represented about 60% of international revenue during the quarter, above the company’s expectation of 50%, reflecting the variable timing of distributor orders. Harris said the stronger distributor contribution added revenue and gross-profit dollars but moderated gross-margin percentage because distributor sales carry lower margins than direct sales.

GAAP gross margin was 69.1%, compared with 70.1% a year earlier. Excluding $1.3 million in restructuring-related inventory charges, adjusted gross margin was 70.8%, up 70 basis points year over year. The company attributed the improvement to favorable U.S. and minimally invasive product mix.

For the full year, Establishment Labs expects adjusted gross margin to align with its year-to-date performance of approximately 70.7%. Full-year adjusted operating expense guidance remained unchanged at $195 million to $200 million, and the company expects positive adjusted EBITDA for 2026.

Reconstruction Preparation Continues

Establishment Labs is preparing for a potential FDA approval of Motiva implants for reconstruction. Its Motiva Flora tissue expander was available in more than 350 facilities nationwide at the end of the quarter, an increase of 14% during the period.

The company said it has responded to the FDA’s current information request and that Bioresearch Monitoring inspections have occurred at multiple clinical sites, including the sponsor site. Caldini said the inspections are a routine part of the review process and that the company expects a decision either near the end of 2026 or at the beginning of 2027, while noting that FDA timing cannot be predicted.

Management said it has increased its U.S. sales force to 55 representatives and has added leadership and internal capabilities intended to support hospital relationships and a reconstruction launch. Caldini said the company estimates approximately 130 hospital accounts drive a majority of U.S. reconstruction volume, though revenue from the potential reconstruction launch would likely be weighted toward the back half of 2027 because hospital value-analysis committee processes can take roughly three to six months.

About Establishment Labs (NASDAQ:ESTA)

Establishment Labs Holdings Inc is a medical technology company focused on women's health and the breast aesthetics market. The company develops, manufactures and commercializes breast implants and related technologies designed for breast augmentation, reconstruction and revision procedures.

Its product portfolio includes the Motiva line of breast implants, which incorporates the company's proprietary implant materials, surface technologies and design features. Establishment Labs also offers Motiva Flora tissue expanders for use in breast reconstruction and has developed Mia Femtech, a minimally invasive breast enhancement procedure intended to provide a less invasive alternative to traditional augmentation techniques.

Founded in 2004, Establishment Labs is headquartered in Costa Rica and serves physicians, hospitals and patients in international markets.

This instant news alert was generated by narrative science technology and financial data from MarketBeat in order to provide readers with the fastest reporting and unbiased coverage. Please send any questions or comments about this story to contact@marketbeat.com.