Establishment Labs Announces $50 Million Private Placement and Preliminary Unaudited Financial Results for the Fourth Quarter and Fiscal Year 2023
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Insights
The private placement of common shares or pre-funded warrants by Establishment Labs is a strategic financial move, aimed at raising capital to fund the company's operations and potentially fuel its growth strategies. The pricing at $25.00 per share allows us to infer a valuation benchmark for the company's equity, which is crucial for investors gauging the stock's current market value against its future potential. With the expected proceeds of approximately $50 million, the company's liquidity is set to increase, potentially improving its ability to invest in research and development, expand its market reach, or pay down existing debts.
However, it is also important to consider the dilutive effect of such an offering on current shareholders. The issuance of two million additional shares will expand the company's share base, which could lead to earnings per share dilution if the influx of capital does not result in a proportional increase in net income. Investors should weigh the potential for long-term value creation against the immediate dilution effect.
The decrease in the year-end cash position by $12.9 million from the previous quarter indicates a significant burn rate, which raises questions about the company's operational efficiency and cost management. This could be a point of concern for investors, as it might reflect underlying challenges in achieving profitability or managing expenses.
Establishment Labs operates in the medical technology sector, focusing on women's health and wellness, particularly in breast aesthetics and reconstruction. This is a niche but important market with specific customer demographics and regulatory challenges. The company's reported preliminary unaudited revenue for the fourth quarter and fiscal year 2023, which is in line with previous guidance, suggests a level of stability and predictability in its business model.
Market trends in the medical technology industry have been leaning towards personalized healthcare and minimally invasive procedures, which could benefit Establishment Labs if their product offerings align with these trends. Investors should consider the company's position within the competitive landscape and its ability to capture market share in a sector that is subject to rapid technological advancements and stringent regulatory requirements.
The context of the revenue figures and the company's financial performance should be analyzed in relation to industry benchmarks and competitor performance. This will provide a clearer picture of the company's market position and potential for growth. The impact of the capital raised through the private placement on the company's market expansion or product development efforts will be critical to monitor in subsequent quarters.
Establishment Labs' focus on breast aesthetics and reconstruction places it within a highly specialized segment of the medical device industry. This sector is driven by a combination of technological innovation, patient demand and regulatory oversight. The company's ability to introduce new products or enhancements that meet both regulatory standards and patient expectations is central to its growth prospects.
Investors should consider the implications of the company's R&D investments and any potential pipeline developments that may arise from the capital raised. The medical device approval process, particularly for products that are implanted in the body, is rigorous and time-consuming. The company's ability to navigate this process successfully is critical to its long-term success.
Furthermore, the financial health of a medical device company is often scrutinized through the lens of its cash position and burn rate. Establishment Labs' expected decrease in cash position may indicate a need to carefully manage its capital expenditure and operational costs to avoid future liquidity issues. The additional capital from the private placement should be assessed in terms of its ability to extend the company's operational runway and fund critical activities such as clinical trials, product development and market expansion.
Preliminary unaudited revenue for the fourth quarter of 2023 is expected to be in the range of
Pursuant to the securities purchase agreement, Establishment Labs has agreed to sell two million common shares or, in lieu of common shares, pre-funded warrants at a price of
Juan José Chacón-Quirós, Founder and Chief Executive Officer of Establishment Labs, commented, “While the second half of our year was challenging, demand has stabilized and we are starting to see a recovery in aesthetics and in our business specifically. We expect to see a resumption of growth in our current markets this year as well as the early results of our entry into
The securities sold in the private placement are being made in a transaction not involving a public offering and have not been registered under the Securities Act of 1933, as amended (the “Securities Act”), or any state or other applicable jurisdiction’s securities laws, and may not be offered or sold in
This press release shall not constitute an offer to sell or the solicitation of an offer to buy these securities, nor shall there be any offer, solicitation or sale of these securities in any jurisdiction in which such offer, solicitation or sale would be unlawful.
About Establishment Labs
Establishment Labs Holdings Inc. is a global medical technology company dedicated to improving women’s health and wellness through the power of science, engineering, and technology. The Company offers a portfolio of Femtech solutions for breast health, breast aesthetics and breast reconstruction. The over three million Motiva® devices Establishment Labs has delivered to plastic and reconstructive surgeons since 2010 have created a new standard for safety and patient satisfaction in the over 85 countries in which they are available. The Motiva Flora® tissue expander is used to improve outcomes in breast reconstruction following breast cancer and it is the only regulatory-approved expander in the world with an integrated port using radio-frequency technology that is MR conditional. Mia Femtech™, Establishment Lab’s unique minimally invasive experience for breast harmony, is the Company’s most recent breakthrough innovation. These solutions are supported by over 200 patent applications in 25 separate patent families worldwide and over 50 scientific studies and publications in peer reviewed journals. Establishment Labs manufactures at two facilities in
Establishment Labs’ Motiva silicone gel-filled implants are currently not approved for commercial distribution in
Forward-Looking Statements
This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). You can find many (but not all) of these statements by looking for words such as “approximates,” “believes,” “expects,” “anticipates,” “estimates,” “intends,” “plans,” “intends to,” “would,” “will,” “may” or other similar expressions in this press release. Any statements that refer to expectations regarding the private placement, such as its closing date and use of proceeds, as well as the Company’s projections of our future financial or operating performance are forward-looking statements. We claim the protection of the safe harbor contained in the Private Securities Litigation Reform Act of 1995. We caution investors that any forward-looking statements presented in this report, or that we may make orally or in writing from time to time, are expressions of our beliefs and expectations based on currently available information at the time such statements are made. Such statements are based on assumptions, and the actual outcome will be affected by known and unknown risks, trends, uncertainties, and factors that are beyond our control. Although we believe that our assumptions are reasonable, we cannot guarantee future performance, and some will inevitably prove to be incorrect. As a result, our actual future results and the timing of events may differ from our expectations, and those differences may be material. Factors, among others, that could cause actual results and events to differ materially from those described in any forward-looking statements include risks and uncertainties relating to: our ability to successfully, timely and cost-effectively develop, seek and obtain regulatory clearance for and commercialize our product offerings; the rate of adoption of our products by healthcare providers or other customers; the success of our marketing initiatives; the safe and effective use of our products; our ability to protect our intellectual property; our future expansion plans and capital allocation; our ability to expand upon and/or secure sources of credit or capital; our ability to develop and maintain relationships with qualified suppliers to avoid a significant interruption in our supply chains; our ability to attract and retain key personnel; our ability to scale our operations to meet market demands; the effect on our business of existing and new regulatory requirements; and other economic and competitive factors. These and other factors that could cause or contribute to actual results differing materially from our expectations include, among others, those risks and uncertainties discussed in the company’s annual report on Form 10-K filed on March 1, 2023 and discussed in the Company's quarterly report on Form 10-Q filed on November 8, 2023, which risks and uncertainties may be updated in the future in other filings made by the company with the SEC. The risks included in those documents are not exhaustive, and additional factors could adversely affect our business and financial performance. We operate in a very competitive and rapidly changing environment. New risk factors emerge from time to time, and it is not possible for us to predict all such risk factors, nor can we assess the impact of all such risk factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements. We are not undertaking any obligation to update any forward-looking statements. Accordingly, investors should use caution in relying on past forward-looking statements, which are based on known results and trends at the time they are made, to anticipate future results or trends.
View source version on businesswire.com: https://www.businesswire.com/news/home/20240109462837/en/
Investor/Media Contact:
Raj Denhoy
415-828-1044
rdenhoy@establishmentlabs.com
Source: Establishment Labs Holdings Inc.
FAQ
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