And until we get to the U.S., the majority of our sales are going to go through the distributor channel. So far, this year has been, like in the first half, it was around 60% and now, you saw that turn around completely with close to 55% of our revenue coming from direct markets. So, it kind of like amplifies the impact. But I think, as we get through the rest of this year and the situation starts to resolve with our distributors, what I think you’re going to see is a resumption of ordering patterns, because they are going to consume those inventories and they will need to come back.
Neil Chatterji: Great. Thanks for that color. Maybe, just switching gears to Mia. Just curious, on any more updates on just the progress for the clinic partners there and the DTC efforts. How much is the two-year initial Mia feasibility study results kind of helping generate leads and update?
Juan Jose Chacon Quiros: Yes. I think that’s a really good point, because the two-year study, which has 0% caps or contractures, 0% rupture, 0% leading, all these things that people care about when they think about an innovative procedure like Mia, well, they tend to dissipate as term of questions and concerns. But I think what we see is two things. The number of clinics that are interested in becoming partner clinics is increasing. Actually, we’re having almost a difficulty in onboarding and training fast enough these clinics, so that they can begin transferring the awareness into leads. The second part is what we are doing with the clinic that have been already onboarded and are speaking to consumers. And what we began with our awareness campaign is now turning into many leads coming to these clinics.
And I think that is something that is very much appreciated in the period of softness is that these clinics are seeing leads and many of these leads are women, who had not thought about a traditional breast augmentation. So, I think, Mia is going to be a shining light in the middle of this period of softness.
Neil Chatterji: Great. That’s it for me. I’ll just hop back in queue.
Operator: Your next question comes from the line of Joanne Wuensch from Citibank. Please go ahead.
Joanne Wuensch: Thank you very much for taking the questions. The last time, you experienced this was when and how long did it take you to, for lack of a better term, dig out of it? And my second question has to do with the FDA process. Where are you with that? Have they come in to inspect the facility? Anything you can sort of give us granularly, yes, that’s the right word, to help better understand where that is? Thank you.
Juan Jose Chacon Quiros: Yes. thank you, Joanne. I think from an industry perspective, probably ’08-’09 was the deepest recession ever experienced. And procedures, at least for the U.S., where you have the best figures, fell for two years, but then recovered back pretty strongly. And within a year after that, they were back to pre-recession levels. In the international market, actually, we see it a lot more often. We see countries like Brazil, Venezuela, Argentina, Mexico, who have periods in which they go through recessions or political instability and that period tends to last a couple of quarters. And then they tend to resume. We’ve seen similar situations in Asia, where growth stopped for a bit in certain markets, like Thailand or in Southeast Asia.
But they do tend to recover. So that gives us the confidence to tell you that although this may be transitory. we are also taking the steps necessary, so that it was to last longer, we are prepared for it. So that is perhaps one of the most important things that we are trying to convey today is that based on the past, we know they will come back. We cannot predict the future. So, we are getting prepared for it. And when it comes to the approval process for the PMA of Motiva Implants, remember, we went from a modular PMA to full PMA. We have provided all the answers to all the questions for every module that the FDA gave us and we are now awaiting for the manufacturing inspection. So, as soon as we have that inspection, I think it will be a major milestone towards the approval.
But once again, I do think that it was quite important to receive the clearance of the Flora Tissue Expander, because it is a good equivalent in terms of many of the characteristics that are part of the breast implant as well.
Joanne Wuensch: Thank you.
Operator: Your next question comes from the line of Marie Thibault from BTIG. Please go ahead.
Sam Eiber: Hey, good afternoon. This is Sam on from Marie. Thanks for taking the questions. Maybe, I can start on the Flora approval that you guys just got here last month. I’m wondering if you guys can use that to essentially introduce the Motiva technology to customers that maybe are newer to Establishment Labs considering it has similar properties like the SmoothSilk surface technology as the regular Motiva implant.
Juan Jose Chacon Quiros: Yes. I think that’s very important to us, because if you think, for the last few years, basically whatever interaction U.S. plastic surgeons had with Motiva came through international conferences that may have attended, friends of them in plastic surgery that have used the device and had told them about it. But basically, many of the things that they heard was through the eyes of our competitors. So, it is very important to us that now we have the possibility to introduce Establishment Labs to talk about our commitment to science and technology. We can talk about the surface technology, which is one of the most important things when it comes to biocompatibility and definitely about our RFID technology, because it is equivalent to what we have also available in the final implant.
So, all of this is going to give us many opportunities to begin talking about what this company is about, which is women’s health and the introduction of this concept into the U.S. market for breast aesthetics and reconstruction eventually.
Sam Eiber: Okay, very good. And maybe, I can use my follow-up here for Raj. I know it’s difficult right now to figure out how long this transitory environment could be, but assuming the implied Q4 guidance, $31.5 million. Would that be an appropriate run rate to, I guess, use for the core markets going forward in 2024 and then layering on top of that some of the new markets as you guys open them up?
Raj Denhoy: It’s not a bad starting point. I mean, as Juan Jose noted, we’ve seen a much bigger slowdown in our distributor markets than we’ve seen in our direct markets. And so, we don’t expect that that’s going to continue at that period of time, but as a conservative base to start from, that’s not bad. But then you start to layer on top of it things like Mia flora in the United States. As Juan Jose mentioned, we’re very close to the Chinese approval. That should contribute next year. So, we have a lot of good things that build on top of that. And we do expect that the fourth quarter should really be the low watermark in terms of the demand we see for these products.
