Establishment Labs’ 2026 Q2 Call: GEM Procedure Timelines, FDA Approval Delays Clash with Revenue Guidance

Date of Call: Aug 6, 2026

Financials Results

• Revenue: $67.5 million, an increase of 31.7% compared to the second quarter of 2025
• Gross Margin: 70.6% of revenue, compared to 68.8% in the prior year period

Guidance:

• Full-year revenue guidance raised to $269 to $271 million, up from previous range of $266.5 to $268.5 million.
• Expect U.S. business to remain strong, OUS to reflect normal seasonal pattern, with Q4 as the strongest quarter.
• Anticipate revenue growth of around 25% for 2027.

Business Commentary:

Revenue Growth and U.S. Market Performance:

• Establishment Labs reported revenue of $67.5 million for Q2 2026, representing a growth of 31.7% over the same period last year.
• The U.S. business generated $24.7 million, an increase of 140.9% compared to the prior year, and now represents 36.6% of total company revenue.
• The growth was driven by the strong adoption of Motiva implants and the increasing contribution from the minimally invasive platform.

Minimally Invasive Platform Expansion:

• The minimally invasive platform generated $12.1 million in revenue during Q2 2026, contributing to the overall revenue growth.
• This platform is expected to approach 15% of the company's global business for the year.
• The expansion is attributed to the platform's ability to bring in new patients and address barriers to traditional breast augmentation with minimal anesthesia, smaller scars, and quicker recovery.

Profitability and Cash Flow Improvement:

• The company reported an adjusted EBITDA of $3.7 million, improving from a loss of $8.5 million in the prior year period.
• Cash and cash equivalents increased to $71.2 million, providing sufficient liquidity for future growth investments.
• The improvements were driven by the scaling of the U.S. business and the minimally invasive platform, leading to increased operating leverage.

International Market Performance:

• Outside the U.S., the business grew steadily by 4.4%, supported by strong execution in direct markets and steady demand from distributors.
• Europe, in particular, delivered 16% growth, with strong performances in Italy, Germany, and the U.K.
• The growth was a result of strategic investments in leadership and resources in key markets, along with the global reach of the minimally invasive platform.

Sentiment Analysis:

Overall Tone: Positive

• "Q2 was another strong quarter for Establishment Labs." "We are raising our full-year revenue guidance." "Our minimally invasive platform is gaining momentum globally." "We have sufficient liquidity to execute our strategy." "We remain very encouraged by the performance of the business."

Q&A:

• Question from Josh Jennings (TD Cowen): Is there any plan to drive the notion that MIA could create an entirely new category in aesthetic space, transitioning breast augmentation from surgery to injectable, and how does that play out internationally and in the U.S.?
  Response: The minimally invasive platform is a significant growth driver, bringing in new patients and addressing barriers like minimal anesthesia and quick recovery; it is in early stages of development and impact is seen in both U.S. and international markets.

• Question from Josh Jennings (TD Cowen): Any details on the GEM development program timeline and regulatory pathway?
  Response: GEM is a differentiated technology for gluteal augmentation; clinical study ongoing in Costa Rica, with early experience expected in Latin America in the back half of 2027, and regulatory pathway being worked through for U.S. and Europe, with U.S. contribution not expected until 2028 and beyond.

• Question from Sam Iber (U.S. Bancorp): What are you hearing from the field regarding Preserve U.S. utilization, adoption, and surgeon plans for the back half of the year?
  Response: Off to a great start with Preserve; significant demand, quick adoption after certification, and expectation to remain a key growth driver in the back half of 2026, with target to train ~500 surgeons for the full year.

• Question from Sam Iber (U.S. Bancorp): Any updated thoughts on global minimally invasive revenue and the $35 million prior guidance?
  Response: Minimally invasive platform is approaching 15% of global revenue for the year, aligning with the raised guidance.

• Question from Mason Carrico (Stephens): What is Motiva mix among Preserve-trained surgeons versus untrained ones, and what long-term percentage of U.S. volumes could be Preserve?
  Response: Strong interest in Preserve among surgeons, seen as future of the industry; it generates significant revenue and will be a bigger part of the market over time, but specific mix and long-term split not quantified.

• Question from Caitlin Roberts (Canaccord Genuity): Any update on FDA conversations for the reconstruction indication and approval timeline, and how many hospitals are you in with Flora?
  Response: FDA feedback is positive, with BMO audits started; approval timing is up to the FDA, but material revenue from reconstruction is not expected until 2027; foundation laid with Flora in several facilities.

• Question from Joanne Wunsch (Citi): What are expectations for second half of 2026 and any color for 2027?
  Response: Expect strong momentum to continue in second half, with Q4 strongest; for 2027, anticipate revenue growth around 25%.

• Question from Anthony Petrone (Mizuho Financial Group): To what extent will Preserve give surgeon sites a competitive advantage, and what are the unit economics versus Motiva and for reconstruction?
  Response: Preserve provides significant competitive advantage by attracting new patients and increasing surgeon revenue; unit economics for Preserve are higher per case than Motiva, and reconstruction ASP is significantly higher, doubling the U.S. addressable market.

• Question from Mike Matson (Needham & Company): Did you see any impact from the Iran war in the Middle East or broader international business in the quarter?
  Response: Growth outside U.S. was solid, driven by direct markets; Middle East (less than 5% of revenue) saw lower orders due to conflict, but no spillover impact on other markets.

• Question from Alan Gong (JP Morgan): How should we think about trajectory of SG&A and R&D spend given investments in Minimally Invasive and upcoming reconstruction?
  Response: Operating expenses have been leveraged; R&D investment remains at appropriate rate to pace innovation pipeline, with no major increases anticipated.

• Question from Matthew Taylor (Jefferies): If you got recon approval on January 1st, how quickly would it contribute, and does the 2027 25% growth include recon?
  Response: Reconstruction contribution would take longer to build as it involves hospital onboarding; 2027 growth guidance does not include reconstruction contribution, as it is not expected this year.

Contradiction Point 1

GEM Procedure (Gluteal Augmentation) Development Timeline

It directly impacts expectations regarding the production timeline and delivery capabilities of a key product, potentially influencing company revenue and investor expectations.

Josh Jennings (TD Cowen) - Josh Jennings (TD Cowen)

2026Q2: The U.S. regulatory pathway is being worked through; it is not expected to materially contribute to U.S. revenue until 2028 or later. - Peter Caldini(CEO)

What is the plan to establish the MIA platform as a new injectable category in the U.S. and internationally, and what is the status and timeline for the GEM procedure (gluteal augmentation) development? - Josh Jennings (TD Cowen)

2026Q2: The company expects to conduct an early experience in Latin America in the back half of 2027 and is working on the regulatory pathway for the U.S. (likely 2028 and beyond) and Europe. - Peter Caldini(CEO)

Contradiction Point 2

FDA Approval Timeline and Revenue Contribution for Breast Reconstruction

Contradiction on the expected timing for FDA approval and subsequent revenue materialization.

Caitlin Roberts (Canaccord Genuity) - Caitlin Roberts (Canaccord Genuity)

2026Q2: The FDA has provided feedback and the company is responding... The positive sign is that the FDA has started its pre-approval inspection (BMO audit) of clinical study sites. - Peter Caldini(CEO)

What is the update on the FDA timeline for the breast reconstruction indication and the current number of hospitals using Flora for this indication? - Anthony Petrone (Mizuho Group)

2026Q1: The company has not made any assumptions regarding FDA approval timing for breast reconstruction in its guidance. - Sandra Harris(CFO)

Contradiction Point 3

2026 Revenue Growth and Guidance

Guidance for full-year 2026 revenue is raised significantly, but spending guidance contradicts prior expense leverage statements.

Joanne Wunsch (Citi) - Joanne Wunsch (Citi)

2026Q2: Full-year 2026 revenue guidance was raised to $269-$271 million. - Peter Caldini(CEO), Sondra Harris(CFO)

What is the guidance for the second half of 2026 and 2027? - K. Gong (JPMorgan Chase & Co.)

2025Q4: Total operating expenses are expected to be $195 million to $200 million, with incremental cash expenses well below the revenue growth, demonstrating model leverage. - Rajbir Denhoy(CFO)

Contradiction Point 4

2027 Revenue Growth Contribution from Breast Reconstruction

Contradiction on whether the 25% 2027 growth guidance includes a material contribution from the pending breast reconstruction approval.

Joanne Wunsch (Citi) - Joanne Wunsch (Citi)

2026Q2: For 2027, the company expects revenue growth to be around 25%. The 2027 growth guidance does not include a material contribution from reconstruction, as the timing of FDA approval is still uncertain. - Peter Caldini(CEO) & Sondra Harris(CFO)

What are the expectations for the second half of 2026 and any guidance for 2027? - Jane Marie Lai (Citi)

2026Q2: The company maintains normal seasonality, expecting Q4 to be the strongest quarter and Q3 to be impacted by seasonal patterns. Full-year 2026 guidance was raised to $269-$271 million. For 2027, the company expects revenue growth to be around 25%. - Peter Caldini(CEO) & Sondra Harris(CFO)

Contradiction Point 5

Timeline for U.S. Contribution from Reconstruction (Flora)

The timeline for material U.S. revenue from breast reconstruction shifts from a 2027 focus to a 2027/2028 outlook, indicating uncertainty.

Caitlin Roberts (Canaccord Genuity) - Caitlin Roberts (Canaccord Genuity)

2026Q2: A material revenue contribution from reconstruction in the U.S. is not expected until 2027. - Peter Caldini(CEO)

What is the update on the FDA conversation and timeline for the breast reconstruction indication, and how many hospitals are currently using Flora for this indication? - K. Gong (JPMorgan Chase & Co.)

2025Q4: Reconstruction is a 2027 and beyond story; it is not factored into 2026 guidance. - Rajbir Denhoy(CFO), Filippo Caldini(CEO)