Establishment Labs Holdings Inc. (NASDAQ:ESTA) Q2 2023 Earnings Call Transcript

Establishment Labs Holdings Inc. (NASDAQ:ESTA) Q2 2023 Earnings Call Transcript August 9, 2023

Operator: Good afternoon. Welcome to Establishment Labs’ Second Quarter 2023 Earnings Call. At this time, all participants are in a listen-only mode. At the end of this call, we will open the line up for question-and-answer session. [Operator Instructions] As a reminder, today’s call is being recorded. I will now turn the call over to Raj Denhoy, Chief Financial Officer. Please go ahead.

Raj Denhoy: Thank you, operator, and thank you, everyone, for joining us. With me today is Juan José Chacón-Quirós, our Chief Executive Officer. Following our prepared remarks, we’ll take your questions. Before we begin, I would like to remind you that comments made by management during this call will include forward-looking statements in the meaning of federal securities laws. These include statements on Established Labs’ 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 a discussion of 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 on Form 10-K and Form 10-Q as well as other SEC filings, which are available on our website at establishmentlabs.com. Please also note that Establishment Labs received an investigational device exemption from the FDA for Motiva Implants and is under clinical trial to support regulatory approval in the United States. We continually seek to expand the geographies in which our products are regulatorily approved. Please check to the local authorities for specific product availability. The content of this conference call contains time-sensitive information accurate only as of the date of this live broadcast, August 8, 2023. Except as required by law Establishment Labs undertakes no obligation to revise or otherwise update any statements to reflect events or circumstances after the date of this call.

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

Juan José Chacón-Quirós: Thank you, Raj, and good afternoon, everyone. Revenue in the second quarter of 2023 totaled $48.6 million, an 18% increase over the second quarter 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 and beyond. Raj will provide additional details on our second quarter 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 Sulayom innovation campus. For 400 people attended the event, including representatives of the Costa Rican government, plastic surgeons, distributors from around the world, suppliers and other business partners.

The new campus supports our strategic plans with additional capacity and capabilities in R&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 1.5 million units a year, which is about half of the current global demand. We also have the ability to add an additional 45,000 square feet of manufacturing as our growth requires. The new facilities include advanced R&D labs and a global learning center that allows us to produce content that we can stream around the world. The on-site surgical theater and procedure rooms allow for medical education and training that can scale to our global business and help us expand the market and create broad demand for our products.

State-of-the art facility is designed to be carbon neutral and uses sustainable materials and other green design elements in standards throughout. Our goal was to build a center for creation and innovation, where our employees, health care professionals and partners from all over the world can usher new standards for the future of plastic surgery. And with the opening of the Sulayom, we are certain we have succeeded. We are better positioned than we have ever been to create and expand new markets and to make a meaningful change in the lives of women around the world. One of the most exciting near-term opportunities for us is Mia Femtech. With the recent approval in Europe of the tools needed, the global rollout of this new category in breast aesthetics is picking up pace.

Our launch activities are centered on creating these new category, with our growing list of certified partner clinics. 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 first week saw us generate over 175 leads, 30 of which resulted in patient-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.

The result is growing discrete with a 1 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 surgeons 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 Mia into a multibillion dollar opportunity. In our aesthetic breast recon franchise, the rollout of our Motiva Flora tissue expander continues.

We developed Flora to provide surgeons and the women who receive these devices better options. Despite 1 in 8 women developing breast cancer, tissue expanders before Flora have seen little meaningful innovation in decades. Among the improvements in Flora are a first-of-its-kind RFID-enabled port, which allows for MRI imaging with our artifacts during the time and expander is used after a mastectomy. By being non-magnetic, Flora also opens new options for radiation oncology treatment. Flora also features our patented self-friendly SmoothSilk surface technology, which can [indiscernible] offer improved patient comfort and a healthy capsule formation. The market feedback is very positive, and we are seeing an increasing number of clinical publications confirming the benefits of Flora.

A recent publication out of Switzerland was the first in-human study to confirm that Flora does not affect the image quality of artifact prone image sequences during MRI, a fundamental improvement in the standard of care for women undergoing breast reconstruction with tissue expanders. The recent publication out of South Korea demonstrated that in radiotherapy planning the Motiva Flora, with the non-metallic RFID-enabled port, showed superior dosimetric results to the heart and lungs versus traditional metallic ports, potentially reducing side effects to these organs. Their RFID port materials also reduce artifacts on CT imaging compared to the metals used in conventional expanders. In another recently published paper, scientists at the Medical University of Business Work in Austria, we are able to confirm in a head-to-head study that Flora provides 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 that allow women to receive reconstructive surgeries that achieve 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 and expect to launch Motiva in this market later this year. 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 the PMA was submitted to the FDA in the first quarter, and the full PMA has now been accepted.

It 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 there via inspections, bringing us closer in this process of approval. It is difficult to predict regulatory time lines, but nothing in the process thus far has diminished our confidence that Motiva Implants will be available soon to women in the United States. I will now turning the call over to Raj.

Raj Denhoy: Thank you, Juan José. Total revenue for the second quarter was $48.6 million, which was a growth of 18%. From a regional perspective, sales in Europe, Middle East and Africa were approximately 42% of the global total; Asia Pacific, 24%; and Latin America made up the balance. Direct sales were approximately 37% of implant sales, while distributors made up the balance. Brazil, which is our single largest market globally, accounted for approximately 14% of total quarterly Motiva sales. Our gross profit for the second quarter was $30.3 million or 62.3% of revenue compared to $27.5 million or 66.7% of revenue for the same period in 2022. Our gross profit in the second 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. As we report in U.S. dollars, the significant revaluation of the colon 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 EMEA clinics, which is reflected in cost of goods. Average selling prices in the second quarter were up from the first quarter of 2023 and year-over-year, which confirms that we are providing increased value even while we continue to take market share. SG&A expenses for the second quarter increased approximately $4 million to $37 million compared to $33 million in the second quarter of 2022. The increase in SG&A in the second quarter resulted in part from our investments in new growth initiatives like Mia, preparations for our launch in the United States and the underlying growth in our business.

R&D expenses for the second quarter increased approximately $2 million from the same quarter a year ago to $6.9 million. Higher personnel costs and increased activity related to the U.S. clinical trial contributed to higher spending in this period. Total operating expenses for the second quarter were $44 million, an increase of approximately $6.1 million from the year ago period. Net loss from operations for the second quarter was $13.7 million compared to a net loss of $10.4 million in the same period in 2022. Our cash position as of June 30 was $90.2 million, compared to $66.4 million at the end of 2022. Our cash position reflects the 1.265 million share offer we completed in late April as well as cash used in the second quarter that included approximately $9 million of investment in CapEx and including for our new manufacturing facility as well as a planned increase in inventories we prepared for the launches of Motiva in China in the United States and further growth we expect in the near future.

As a reminder, we have two remaining tranches on our debt facility, which totaled $50 million 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 million 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 while still funding our growth initiatives. We are maintaining our revenue guidance for 2023 in a range of $200 million to $210 million. There are a couple of things to note in the case of revenue for the second half of the year. We expect approval of launch of Motiva in China in the fourth quarter.

Also, Mia launched in Europe in the summer months, which is a seasonally slower period. We expect to meet consultations to begin in earnest in the third quarter and procedures to contribute more meaningfully in the fourth quarter 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 Mia and the start-up of manufacturing a new Sulàyöm facility. We continue to see regular fluctuations in gross margin. 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. 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 and begin to leverage our spending. I will now turn the call back to Juan José.

Juan José Chacón-Quirós: Thank you, Raj. During the opening of the Sulàyöm campus, we held a discovery session as part of the program. The session highlighted the scientific and clinical foundations that have been laid over the last 2 decades and which have led to the products we’ve introduced to the market. Motiva Implants, JOY, Mia Femtech and Flora are 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 offerings. We’ve taken the minimally invasive platform developed with Mia Femtech and are leveraging it into a new minimally invasive aesthetic categories.

The first of which is minimally invasive GlutealArmonic modeling, which we call Gem. The market for gluteal augmentation in 2021 was estimated by ISAPS, 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 and procedure, and we will provide updates as we make progress. Since 2014, our implants have been available with an RFID sensor platform we call QID. The passive privacy proven sensor provides identification information about the device, such as the serial number, data 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 41 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 non-metallic and will add additional capabilities such as the measurement of temperature, this feature and in particular, core temperature is a very useful biomarker. And with them, we have a device which can provide measurements in real time. Temperature is only the first of what we hope will be a suite of biomarkers enabled by the Zen platform. Gem and Zen are just two of the many exciting things we are working on and the expanded capabilities in our new Sulàyöm campus in research and development, medical education, media and manufacturing will enable us to develop them to their full potential.

We remain confident that the target we offered earlier this year of $500 million in revenue in 2026 will be proven conservative. And with the continued contribution of our existing product portfolio and the growing contribution of new solutions like Gem and Zen, we believe that we will continue to grow at a healthy clip well beyond 2026. I will now turn the call over to the operator for your questions.

Q&A Session

Operator: Thank you. [Operator Instructions] And our first question comes from the line of Matt Taylor with Jefferies. Please proceed with your questions.

Young Li: Great. This is actually Young Li, in for Matt. Thanks for taking our question. I guess to start, maybe on the China launch, I think mentioned Q4, you’re using the same distributor that you had been using in South Korea, and you’re going to be replicating a lot of the Korean 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 some of the other key markets.

Juan José Chacón-Quirós: Yes. Thank you. And I think it’s important to remind everyone that China is 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 to create awareness about Motiva Implants and make them the implant of choice. 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 seen 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 that 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 traction in the rest of Asia.

Young Li: Alright. Excellent. My follow-up is on Mia. Very early in the launch, but I 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 and confirms the market expanding opportunity. How is the Japan launch going? What are some of the positive or negative surprises that you’re seeing so far?

Juan José Chacón-Quirós: 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% of those patients were not seeking a breast augmentation. And that’s what’s exciting to us, is that we are talking about a true new category and market expansion. 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 accretive to us communicating directly to consumers. So it’s going to take a little longer. There is going to be more word of mouth. But when we see the results and especially the outcomes for patients and the response to the experience, of course, we feel like it’s going to get there in terms of the patient acceptance and the increase in awareness and satisfaction.

Young Li: Got it. Thank you very much.

Operator: Question is from the line of Anthony Petrone with Mizuho Group. Please proceed with your question.

Anthony Petrone: Congrats on a strong quarter here and as well as for the opening in Costa Rica, and thanks for hosting. It was a great event. Maybe just pivoting to Motiva, U.S. clearance, obviously, the PMA is submitted here. Just wondering sort of the behind the seasons mechanics here, how many rounds of questioning do you expect from FDA. And I would assume that there is no panel needed here, but I could be wrong. Is there any thoughts on the need for an advisory panel for clearance of Motiva in the U.S.? And then I’ll have a couple of follow-ups.

Juan José Chacón-Quirós: Yes. Thank you, Anthony. And it’s important to know that we submitted the full PMA and was accepted for review by the agency. We are trying to be very careful to keeping to the proprietary 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 bio inspections which is bringing us closer to the approval. 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.

Anthony Petrone: Okay. Okay. And then just a follow-up here. One would be on Gem unveiled at the Sulàyöm campus opening, you mentioned Juan José, 523,000 procedures globally. Just wondering if there is any pricing data you can share on glial implants relative to breast augmentation. 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 U.S. 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.

Juan José Chacón-Quirós: Well, first, the interest from consumers on contour aesthetics and in particular, gluteal aesthetics has been increasing over the last few years. And when you look at that number, more than 0.5 million procedures per year. 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 compared to traditional breast aesthetics, I think you can use a similar mindset to think about what Gem could be compared to traditional gut options?

Raj Denhoy: Okay, 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 second quarter alone. 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.S. very soon. The tailwind at 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.

Anthony Petrone: Thanks, again.

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

Unidentified Analyst: Hi, good afternoon, guys. This is actually Anthony on for Joanne. Thank you for taking our question. My first is just on guidance since there is some moving pieces with the U.S. and China launches. Can you just talk about what your assumptions are at the low end of the guidance versus the high end of the guidance? And then I just had a quick follow-up. Thank you.

Raj Denhoy: Yes. Thanks for the question. It is – there are a lot of swing factors for us over the balance of the year. We are thinking about the contribution from Mia. Of course, the China approval, which we talked about, we are expecting in the fourth quarter. And there is a lot of different ways that the year could unfold. Generally, we are comfortable with the entire range we provided, but it’s just very difficult to pinpoint exactly where we will fall given all these various dynamics at play.

Unidentified Analyst: Alright. That’s helpful. And then I thought sort of information on Spain on the leads to a computation conversion was interesting. Do you have any – do you know how many of those, I think it was 30 patients that sought out the new appointments? Do you know how many actually moved on to get the procedure?

Juan José Chacón-Quirós: 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 to is indicative of the way we are looking at Mia. 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.

Unidentified Analyst: Great. Thank you.

Operator: Thank you. Our next question is from the line of Josh Jennings with Cowen & Company. Please proceed with your question.

Josh Jennings: Good afternoon. Thanks for taking my questions. And Raj, I wanted to start just on JOY plus and Ergonomix to implant, the premium pricing associated with that program and just to get a better understanding of the momentum this year in 2023 as new countries, you 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 months, 12 months, 24 months?

Juan José Chacón-Quirós: So, as we launch new exciting experiences like the one we have with JOY, which is a program to promote the Ergonomix2 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 have been able to shape that through technology and through the type of value propositions that JOY embodies. 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.

Josh Jennings: Makes sure that, and I apologize for referencing that JOY plus and not just JOY. But I wanted to follow-up on this topic, and you did unveil a development program for Mia plus down in Costa Rica at the Sulàyöm and opening. And I wanted to just I think you have 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 procedure as well as you move forward with that Mia plus development program? Thanks for taking the questions.

Juan José Chacón-Quirós: So, in all of 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 consumers interested in Mia were not considering the breast augmentation before. The other half, we are 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 Mia, both very positive for us.

Josh Jennings: 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.

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

Josh Jennings: Excellent. Appreciate it.

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

Sam Eiber: Hi. Good afternoon Juan José and Raj. This is Sam Eiber 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 in the prepared remarks. But in terms of seasonality here in Q3, is that something we should expect relatively in line with 2021 and 2022?

Raj Denhoy: We do expect seasonality, right. And I think one thing you are seeing probably in our numbers is that the amount of revenue going through distributors is also increasing, 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 going to show up here in the third quarter as we have seen. And also [Technical Difficulty] we expect the dip in the third quarter is probably a bit more pronounced than we have seen relative to the overall cadence of revenue for the year than we have seen in the years past.

Sam Eiber: Okay. That’s helpful. I appreciate the comments. And maybe just a follow-up here on some of the questions out of the initial Spain experience for Mia. In the past for typical breast augmentations, we have heard that it takes anywhere from months to a few years to – for a patient to decide to go through the procedure, but it sounds like with Mia that’s potentially accelerating some of that conversion. Just wondering if that was something you think is a phenomenon that’s maybe translatable to the broader market for Mia.

Juan José Chacón-Quirós: I think it’s one of the most interesting things because the consideration phase in traditional breast augmentation tends to be around 4 years to 8 years. So, when you look at the group that was not interested in a traditional breast augmentation that would signal that the cycle of decision making is made a lot easier by the fact that you are removing all these obstacles 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.

Sam Eiber: Thanks for taking the questions.

Raj Denhoy: Thank you.

Operator: Our next question is from the line of Neil Chatterji with B. Riley. Please proceed with your question.

Neil Chatterji: Yes. Good afternoon and thanks for taking our questions. Maybe just sticking with Mia, you have 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 is any other anecdotal feedback you have gotten from those centers?

Juan José Chacón-Quirós: 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 ahead with Mia. So, just to let you know, we have also added another chain of clinics in Japan, we have added two high premium clinics in Germany, and we are adding more as the summer progresses. So, I think that’s really good for us because [Technical Difficulty] potentially filled that in for us.

Neil Chatterji: Great. And then just one follow-up here for me, I mean you talked about kind of the ASPs being up, I think sequentially and year-over-year. So, just curious if there is any nuances or dynamics to think about for the various international regions?

Raj Denhoy: 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 are seeing JOY start to get more utilization. That’s a higher-priced product for us. We have taken a little bit of price in a number of our markets. It really reflects the value that we are bringing with the products that we are taking to market. And so I would say it’s really a combination of, again, that mix and then the pure price we are seeing. And while we are pretty pleased with how things are progressing there.

Neil Chatterji: Great. That’s it for me. Thanks.

Operator: [Operator Instructions] The next question is from the line of George Sellers with Stephens. Please proceed with your question.

George Sellers: Hey, good afternoon and thanks for taking my question. I apologize if I have missed this, I am hopping from a few calls, but I was just curious if you could some color on maybe what you are expecting in terms of contribution within the guidance from China. I am not sure if you have specifically quantified that, but obviously, that approval has been a little bit slower than we had expected, and just curious if that’s a potential headwind or risk to the guidance at this point?

Raj Denhoy: Hi George. We are 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 in approval this year is very high. We continue to work with our partner in China and answering the last few questions that we have received. As I have noted on an earlier question, there is just a number of different ways that the year can play out with the contribution from Mia with China approval. And so again, we are comfortable with the entire range we have given, and it’s just really difficult to pinpoint where exactly we are going to fall within that.

George Sellers: Okay. That’s totally understandable. And then maybe switching to Mia, you have announced 14 partnerships so far. I am just curious how you are thinking about that playing out the rest of this year, what your expectations are? And if you are trying to sort of accelerate those partnerships, maybe what gets that or get to sign up faster or if this is maybe a purposeful, slower rollout and sort of picking and choosing the best partners at this stage.

Juan José Chacón-Quirós: No, absolutely. I think what we are trying to do is accelerate the number of premium partner clinics that we bring on board in Europe. And I think there is still a lot of space for us to acquire some of those premium partners. And also, more importantly, we need to train them, certify them, and get them to launch. So, I think the importance is that as we move through this and month-by-month, we have 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.

George Sellers: Okay. Great. Thanks for the time again. I appreciate it.

Operator: Thank you. This is all the time we have for questions today. I will turn the call back over to Juan José Chacón-Quirós. Please proceed with your closing comments.

Juan José Chacón-Quirós: 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.