Evolus, Inc. Q4 FY2023 Earnings Call

Good afternoon, everyone, and thank you for being with us. Welcome to Evolus' Fourth Quarter and Full Year 2023 Earnings Conference Call. This conference is being recorded and streamed live. I would now like to hand it over to Nareg Sagherian, Vice President and Head of Global Investor Relations and Corporate Communications. Please go ahead.

Thank you, operator, and welcome to everyone joining us on today's call to review Evolus' fourth quarter and full year 2023 financial results. Our fourth quarter and full year 2023 press release is now on our website at evolus.com. With me today are David Moatazedi, President and Chief Executive Officer; Rui Avelar, Chief Medical Officer and Head of R&D; and Sandra Beaver, Chief Financial Officer. Before we begin our discussion, I'd like to note that during our call, our prepared remarks will include forward-looking statements within the meaning of United States securities laws and management's additional forward-looking statements in response to your questions. Forward-looking statements are based on management's current assumptions and expectations of future events and trends, which may affect the company's strategy, operations or financial performance. Listeners are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this call, and the company undertakes no obligation to update or review any estimate, projection or forward-looking statements, except as required by law. These forward-looking statements are based on estimates and assumptions that, although believed to be reasonable, are inherently uncertain and subject to a number of risks and uncertainties. A detailed discussion of the risks and uncertainties that the company faces is contained in its annual report on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K. Additionally, today's discussion will include non-GAAP financial measures, which should be considered in addition to and not as a substitute for or in isolation from our GAAP results. A reconciliation of GAAP to non-GAAP results may be found in our earnings release, which was furnished with our Form 8-K filed today with the SEC and on our Investor Relations website at evolus.com. Following the conclusion of today's call, a replay will be available on our website at evolus.com. With that, I'll turn the call over to our CEO, David Moatazedi.

Thank you, Nareg. We are very pleased to report on another record quarter and 2023 full year results while consistently focusing on delivering on our long-term strategy of leading the performance beauty market. Our focus is consistent and purposeful. We are building a beauty brand primarily targeting millennials who represent the fastest-growing segment of the neurotoxin market and are known to influence adjacent generations. Our differentiated approach has resulted in Jeuveau becoming the fastest-growing toxin in the United States aesthetic market for the third consecutive year. During the year, we achieved several major milestones, including strong execution in the U.S. with our neurotoxin, the global expansion of our neurotoxin into Europe, and the addition of our novel dermal filler line. As a result, we increased our total addressable market by 78%. We now view our addressable market to be approximately $6 billion and comprised of three distinct segments, including two segments where we currently have little to no penetration. The first segment is the U.S. neurotoxin market of $2.6 billion value, which is projected to grow at high single to low double-digit growth rates for the upcoming five years. We are celebrating our fifth year of Jeuveau being on the market in May and are proud to have achieved double-digit market share despite new competitive entrants. The second segment we plan to enter in 2025 is the U.S. filler market, which we estimate is a $1.6 billion market growing at a similar rate to toxins with a clear overlap in our current customer base. And the last segment is the international market, which represents $1.8 billion, having doubled with the addition of the dermal filler product line, and we expect to have a presence in countries representing more than 90% of the total addressable market by 2028. In addition to our market expansion, we executed on the R&D front with our Phase 2 extra-strength Jeuveau study, which proved 26 weeks of duration providing our growing consumer base the option of a longer-duration formulation. In the U.S., we added nearly 3,000 new accounts to end the year with more than 12,000 total purchasing accounts. And we exited 2023 with 750,000 consumers in our Evolus Rewards Loyalty Program, which grew by 55% over the prior year. Importantly, consumers receiving repeat treatments represented 60% of total redemptions in 2023, up from 50% in the prior year. These milestones reinforce the global demand for our consumer brand, the high quality of our products, and the competitive moat we've built as the first company focused on cash-based aesthetics. Continued gains throughout 2023 position us to provide 2024 revenue guidance of $255 million to $265 million, representing a 31% growth at the top end, and this is from our announcement in January. This top-line performance, coupled with a strong disciplined focus on operating expenses, is why today we announced our revised outlook on profitability, which now assumes we will achieve profitability in the fourth quarter this year and for the full year in 2025. Furthermore, these milestones are indicative of the progress we are making toward reaching our long-range guidance of at least $700 million in revenue by 2028, a compound annual growth rate of 28%. Now I'll get into a high-level view of the financials, which are unchanged from the preliminary results reported on January 16. In 2023, we achieved a record global revenue of $61 million for the fourth quarter and $202 million for the full year, representing 40% and 36% growth over the prior year, respectively. The full year results surpassed the top end of our guidance of $198 million due to our growing consumer demand and continued market share gains. Our fourth quarter revenue increase of 40% over the prior year quarter and 22% sequentially were both multiples above the estimated industry growth rate. Importantly, our back-half growth accelerated meaningfully above the first half, driving continued market share gains with Jeuveau and resulted in our market share reaching 12% in the fourth quarter. Looking to our international business, we continue to expand our global footprint with the success of Nuceiva and announced our licensing agreement with SYMATESE in December to exclusively distribute dermal fillers under the brand name Estyme in Europe. This is a significant agreement for Evolus, doubling our total addressable international market to $1.8 billion. Now I'd like to turn the call over to Rui to discuss the dermal filler line and review the accompanying slides posted to our Investor Relations website.

Thank you, David, and good afternoon, everyone. As David mentioned, I'd like to share with you an update on the Evolysse/Estyme filler product line. Estyme is the name we use in Europe, and to make it simple, I'll refer to the line as Evolysse on the call. Going to Slide 2. The Evolysse HA filler manufacturing process uses a unique coal technology, which helps preserve the natural HA molecule structure, the building block of HA gels. Each of the HA products undergoes a specific manufacturing process, creating an optimized gel product for the target indication. Last month, the largest aesthetic meeting in the world, IMCAS, took place in Paris, and we'd like to share with you some of the clinical data shown there. Slide three. The data for Lift from the European Nasolabial trial was presented, and as a reminder, in the U.S., the two lead products are Smooth and Lift with an expected PMA filing with the FDA this summer. The study was double-blind, randomized, multi-center, enrolled 45 patients, a split-based design, and used Restylane-L as the active control compared to Lift. The average volume injected and the baseline severity of the nasolabial fold scores were similar in both groups. The primary endpoint was non-inferiority comparing the improvement in the NLF severity scores at 4 weeks between the two products. The difference was -0.16 in favor of Evolysse Lift and the upper bound of the 95% confidence interval was 0.03, successfully passing the primary endpoint. Of note, the confidence intervals cross 0, demonstrating equivalence between the two products. The graph on the right illustrates the change in the NLF severity grade from baseline out to nine months. Note that despite similar volumes injected at the initial treatment, Evolysse Lift seems to have a more pronounced effect at all time points and reached statistical superiority at three and six months. Slide four, the graph on the left illustrates the percent of responders with at least a 1-point improvement over time using the NLF scale as assessed by the investigator. At nine months, the patient responder rate was 31% for Restylane-L and 46.7% for Evolysse Lift. The global aesthetic improvement scale on the right assesses the actual aesthetic outcome after treatment. The investigator scores are high throughout the study, but more importantly, the patients' own assessment of their respective aesthetic outcome was also high right to the end of the study, with Restylane-L at 77.8% and Evolysse Lift at 82.2%. Slide five. SMOOTH is a softer product than Lift and can also be used in nasolabial folds, providing a second option in the area. In Europe, SMOOTH was also studied for the treatment of fine lines around the mouth or perioral lines. This was an open-label, 61-patient study using a validated scale and measured the severity grade improvement of fine lines over time. Fine lines are difficult to treat since the product needs to be placed superficially, and only small volumes can be used. Here, we can see the results all the way out to one year with only half a milliliter of SMOOTH injected. Slide six. The sculpt product is halfway through its clinical trials in the U.S. In Europe, a 60-patient no-control study tracked the 3D volumetric correction of patients for 1.5 years. A little over 1 ml was injected into each subject, and then using a special system, the 3D volume of the treatment was measured. We see here an initial correction then a stable correction from 6 to 18 months at the end of the study. Slide seven. Lift is of particular interest to Evolysse, as this is a popular lead indication for millennials. In Europe, 72 patients were enrolled in a single-arm study, and their lip fullness was assessed using a validated score over the course of one year. Although not a head-to-head study, to provide context, we've included the study results from the Emervel lip study, a product known as Restylane Kysse here in the U.S. It's interesting to note that the volume of product used in the two studies is different. One ml of Evolysse Lift was used at the initial treatment, and no touch-ups were allowed. In the Restylane study, 1 ml was also used at the time of the initial treatment, but a touch-up was allowed, increasing the average amount of product received by each patient by 30% to 1.3 ml. Looking at the results over time, despite requiring less product, Evolysse Lift seems to provide more correction and lasts twice as long. Slide eight. The global aesthetic improvement scores were high throughout the duration of the trial for both the investigator and the patients. At the 1-year mark, 88% of the patients rated themselves as still having an effect. Slide nine. In summary, we now have the rights to the Evolysse/Estyme filler line throughout Europe and the U.K. We expect to receive European approval for Smooth, Lift, Sculpt, and Lips in the second half of this year under the new MDR approval process. Note that Lift is already approved in Europe under the past MDD process. In the U.S., we remain on track. The first two products, Smooth and Lift, had the last patient just complete the trial this week. We plan to present the top-line results for this U.S. pivotal study this summer and submit the PMA to the FDA with an anticipated approval in 2025. Sculpt is halfway through its pivotal trial, and we expect approval in 2026 followed by Lips and Eyes in 2027. Moving from Evolysse, as Evolus continues to lead our portfolio with its precision profile, we recently completed our Phase 2 Jeuveau duration “extra-strength” study, demonstrating an extended duration of 26 weeks and expect the results to be published in a peer-reviewed journal this year. With that, I'll turn it back to you, David.

Thank you, Rui. I could not be more proud of what our R&D team has accomplished in the short period of time, particularly the head-to-head study with our Lift filler compared to Restylane, which demonstrated statistical superiority at multiple time points. As Rui stated, we have now completed the last patient visit for both Lift and Smooth fillers in the U.S., with plans to file with the FDA this summer. As a reminder, the Lift product will be positioned as the most versatile and highest-volume filler in the product line. In Europe, we're expecting all four filler products to be CE Mark approved by the end of the year. This puts us on track for the global launch of our filler line in 2025. We remain excited about the differentiation of Evolysse and its potential to become one of the leading HA fillers in the U.S. These products were designed to be the next-generation fillers by the scientists who developed the market-leading Restylane products. Our cash pay focused platform was designed for scale, and there are tremendous synergies we can achieve by leveraging our seasoned sales force and our rapidly growing customer loyalty program to launch this innovative new filler technology alongside our flagship Jeuveau in the U.S. and Nuceiva in Europe. It's also worth noting this was a highly capital-efficient transaction for Evolus. Now I'll turn it over to Sandra, who will cover the financials.

Thanks, David. I would like to begin by congratulating the Evolus team for the outstanding fourth quarter and strong finish to 2023. Before we review the results, I would like to highlight two significant achievements for the fourth quarter. First, excluding share issuance of the European filler agreement, we achieved profitability, defined as positive non-GAAP operating income. And second, we delivered positive cash from operations. These are significant milestones towards achieving our updated guidance of profitability in the fourth quarter of 2024 and for the full year 2025. These achievements would not be possible without the efforts of the entire Evolus team, and I would like to sincerely thank them for their hard work and dedication. Now turning to our results. Consistent with what was reported in our January announcement, global revenue for the fourth quarter was $61 million, up 40% compared to revenue in the fourth quarter of 2022, with U.S. sales comprising more than 90% of the total revenue and driven primarily by higher volumes. For the full year, we reported global revenue of $202.1 million, a 36% increase over full-year revenue in 2022 and above the top end of our guidance of $198 million. We continue to experience strong pricing in the U.S. with our average selling price in 2023 remaining stable compared with the same period last year, while our customer reorder rate remains at approximately 70%. Our reported gross margin for the fourth quarter was 57.2%, and our adjusted gross margin, which excludes the amortization of intangibles, was 68.4%. For the full year, reported gross margin was 68.1% and adjusted gross margin was 69.5%. Adjusted gross margin, which excludes the amortization of intangibles, is aligned with company guidance of 68% to 71%. Our GAAP operating expenses for the fourth quarter of 2023 were $70 million compared to $63.5 million in the third quarter of 2023. Non-GAAP operating expenses for the fourth quarter were $45.5 million compared to $40.3 million in the third quarter. Our fourth quarter GAAP and non-GAAP operating expenses included $4.4 million of IP R&D expense related to the share issuance for the European filler license agreement. Operating expenses were $251.3 million in 2023 compared to $213.9 million in 2022. Non-GAAP operating expenses were $163.9 million in 2023 compared to $137.7 million for 2022 and in alignment with the company guidance range of $160 million to $165 million. Non-GAAP operating expenses exclude product cost of sales, stock-based compensation expense, revaluation of the contingent royalty obligation, and depreciation and amortization. Reported selling, general and administrative expenses for the fourth quarter were $43 million compared to $43.3 million recorded in the third quarter. This quarter, SG&A expenses included $4.1 million of noncash stock-based compensation compared to $4.3 million in the third quarter. SG&A expenses were $155 million in the full year 2023 as compared to $141.8 million in 2022. Our non-GAAP loss from operations in the fourth quarter was $3.7 million compared to $5.7 million reported in the third quarter. With this $2 million sequential improvement in the fourth quarter, Evolus delivered our lowest non-GAAP operating loss since inception. Excluding share issuance for the European filler license recorded as IPR&D expense, the fourth-quarter non-GAAP operating income was a positive $0.7 million, representing continued progress to sustain profitability. Non-GAAP loss from operations for the full year excludes stock-based compensation expense, revaluation of the contingent royalty obligation, and depreciation and amortization. Turning to the balance sheet, we ended the year with $62.8 million cash compared to $38.7 million at September 30, 2023. In the fourth quarter, we had a record low quarterly cash use of $0.9 million, excluding the $25 million tranche drawn under the Pharmacon line of credit, and generated cash from operating activities of $0.8 million. Net cash used in the fourth quarter of 2023 continued its sequential quarterly decrease throughout 2023, further demonstrating our continued progress towards cash flow breakeven. Given the capital-efficient nature of our filler agreements, we continue to expect our liquidity to fully fund us to profitability and beyond. Before we turn to Q&A, I would like to summarize our 2024 guidance. Total revenue for the full year is projected to be $255 million to $265 million, which equates to 26% to 31% growth for the full year. Adjusted gross margins are expected to be in the range of 68% to 71%. Full year 2024 non-GAAP operating expenses projected between $185 million and $190 million. Profitability, defined as positive non-GAAP operating income, is expected in the fourth quarter of 2024 and for the full year 2025. As a point of note, due to one-time filler launch expenses within 2025, profitability may not be achieved every quarter. Other modeling assumptions for 2024 include quarterly interest expense of $4.4 million and full-year weighted average shares outstanding of approximately 57 million. Looking beyond 2024, we continue to target total revenue of at least $700 million in 2028, driven by continued growth in share gains in our neurotoxin business in the U.S. and international markets along with the growing contribution from our line of fillers that begins in 2025. This equates to a compound annual growth rate of 28% on a total addressable market of approximately $6 billion today, growing to approximately $10 billion in 2028. Now let me turn the call back to the operator to begin Q&A.

Our first question comes from Annabel Samimy with Stifel. Please state your question.

Hi, thanks for taking my questions and congratulations on some interesting data. It looks like we're getting pretty close to the commercial launch of the Evolysse and Estyme product line. So, I was wondering if you planned on implementing any bundling-like programs initially when you launch Evolysse or keep it independent until we gain some traction? I guess I'm looking for any thoughts around your strategy there. Secondly, I want to understand the color that drove your accelerated increase in accounts. Do you expect this to be sustainable? And do you have any type of target penetration in terms of the accounts that you want to reach before you focus more on just penetrating more deeply into these accounts versus broadening out? Those are a few of my questions, and I can get back in the queue. I always have more.

Well, thank you for the questions, Annabel. Let me start with our current business, and then I'll address the Evolysse question second. As far as the increase in the accounts that you saw in the back half of the year, it accelerated over the front half. If you look even further back, into 2022, you saw an accelerating trend that started to form before that as well. From our standpoint, it's just an indication of the increasing interest in partnering with Evolus. We don't have any additional incentives for our sales force to expand the number of new accounts that we're getting each quarter; it’s just a function of the demand that we're seeing in the market. So we're really pleased to see that increase. Despite all that, we finished 2023 with 12,000 accounts in a market with over 30,000 purchasing customers. So as you know, we still have a significant opportunity to continue to go wider, which we anticipate will be an effort over the coming years as we continue to expand our footprint and build our trust with these practices around the country. Now as far as going deeper, that is an initiative as well within our existing customer base. We do stratify our customers based on our tiers, which we call Evolux, and the top tier of customers certainly get more attention from our sales force. They also earn more benefits in the co-branded media program, and those activities have us engaging with these practices more. What we observed was that our existing base of customers were growing at a healthy clip. As a matter of fact, growing at a significantly faster clip than the market more broadly. This gives us good confidence that our share gains, even among established customers, still have a lot of room for growth. In addition to that, I think that kind of dovetails into your question around Evolysse, which you asked about bundling. What we've done that's different with our offering to customers is that we do have pricing for our brand Jeuveau. And as you purchase more, you get benefits for the pricing, just as every other company in this space does. However, what we've done that's unique is as you purchase more from us, we reinvest back into the practice through co-branded media. We believe that this reinvestment helps partner with these practices, helps them to grow, and also drives our brand awareness. That's the type of partnership we want to forge over time across our portfolio. So as we look ahead to Evolysse clearly, that is launching in the filler market, which is a different category. It's one we have a lot of experience in as a management team. We recognize that the needs are different in that market. However, the common element is the interest of these practices to grow and build their brand in partnership with us. We anticipate the co-branded media will be an umbrella that carries across our franchise going forward. As far as what we might do with pricing, I think it's probably too early to get into that level of detail now.

Okay, great. And if you could just share, do you have a sense of market share within the Evolux practices? Has that increased given that you've got much more significant growth in those practices than you do in the broader market?

Yes. It's hard to quantify exactly what our shares are across practices. We do know that, as we commented in my opening remarks, we believe we achieved a 12% unit share overall in the fourth quarter. That's the highest unit share we've achieved since launch. We achieved that partially driven by our account penetration to the 12,000 customers and also by going deeper with existing customers. So, it's hard to say exactly where we sit overall within the existing 12,000 customers that are purchasing Jeuveau. The last update we gave was we thought we were around 20% to 25% market share. We expect to be above that; I just don't have an updated number to give you at this time.

Our next question comes from Marc Goodman with Leerink Partners. Please state your question.

Thank you for taking my question. This is on the line for Marc. Regarding the 2024 sales guidance, can you discuss the growth driver in your assumptions, such as the percentage contribution from volume versus pricing, and remind us of the discount relative to Botox? Thank you.

Yes, of course, thank you so much for the question. As it relates to our 2024 sales guidance, as we delivered in 2023, significant growth at 36%, we see a great opportunity to continue to leverage that back half accelerated growth into 2024 with the guidance that we gave at $255 million to $265 million. As we noted, the majority of our revenue performance came from volumes. However, we continue to see stability in price and the opportunity to potentially raise prices and continue to close the gap between Jeuveau and Botox. The majority of our growth in 2024 continues to be driven by volume. As David mentioned, we're significantly under-penetrated in the market, whether it's within the accounts we currently sell in or by adding new accounts available to us across the U.S. But we also see an opportunity to continue to press price where it's appropriate.

Our next question comes from Louise Chen with Cantor Fitzgerald. Please state your question.

Hi, congrats on all the targets, and thank you for taking my questions here. I wanted to ask you if there is any way you can quantify or at least qualitatively tell us how profitable you expect to be in the fourth quarter? And then how are you thinking about ASP in 2024 for Jeuveau? What are you factoring into your guidance there? Lastly, just when we model out 2024, how should we think about seasonality bridge? Thank you.

Okay, great. Louise, let me take the first part regarding pricing for 2024. Our pricing has been very strong. Since launch, our ASP has only gone up for this product. I think as we continue to shift our focus on the value we're bringing to customers, we will reassess how we can continue to narrow the gap compared to the market leader. We've seen more price competition, and we will continue to build our pricing favorably to drive volume. We expect that prices will remain steady and even increase over time.

As it relates to your other question on profitability, we outperformed our own expectations in the fourth quarter of 2023, delivering well above the top end of our guidance. Excluding the share issuance related to our European filler license, we have achieved profitability here in Q3 2024. This creates a great foundation for us to build off and gives us the confidence needed to deliver the revision to our guidance for 2024, where we are confident we'll achieve profitability again in Q4 2024. How much profitability we expect will continue to be assessed throughout the year, but we have great momentum going into 2024 and continue to maintain disciplined operating expense management.

As for seasonality, it has been fairly predictable in this market if you back out the one COVID period. You should expect to see similar trends where the fourth quarter will be the strongest followed by the second quarter, while the third quarter is typically the weakest. We're expecting it to mirror that this year.

Our next question comes from Navann Ty with BNP Paribas. Please state your question.

Hi, everyone, thanks for taking my question. I was just curious if your guidance includes some upcoming competition in the U.S. from Gel and Galderma?

Yes. As you know, earlier this month, Hugel received FDA approval for Botulinum Toxin Letybo. We were aware of their PDUFA date, and we had assumed in our guidance when we provided that in January that they would be entering the market in 2024. So nothing changes regarding that guidance. We had a new entrant in late 2022, and of course, you saw our performance last year where growth accelerated in the back half of the year despite a new entrant coming into the market. This year, we'll likely see the entrance of Hugel with Letybo. We are launching in Europe around the same time as Hugel, and we've continued to perform well in those markets. There's plenty of room for new competitors. This is a high-growth market. What's unique is our value proposition, and we will continue to build on that, believing that will drive meaningful growth in the future.

Our next question comes from Serge Belanger with Needham & Company. Please state your question.

Hi, good afternoon and thanks for taking my questions. First one, I guess, regarding the number of new account additions in the fourth quarter, a pretty big number that was larger than I think the average for the first part of 2023. Is that sustainable going forward? Secondly, I think we're nine weeks into the first quarter. Can you give us any color on what the market environment is like in terms of volumes and things like that? Thanks.

Good question about the account additions. We entered the year last year, assuming we'd be adding around 500 to 600 new accounts a quarter. We were equally impressed by the numbers the field brought in. We don't have a set requirement for new accounts per quarter, so I can't commit to a specific number. It depends on the territory and the opportunities available. When we acquire new accounts, we educate them on the product and provide training. This usually takes about 12 months for a new account to become meaningfully productive. We'll continue to add new accounts as we receive them, but we're limited by our ability to properly onboard them. As we entered the new year, we saw what we expected, very healthy trends in the back half of last year. I think you observed strong trends from consumer demand, and we're seeing similar trends carry into the first quarter of this year. It's off to a good start as we expected. Nothing unusual.

Regarding your targets for $700 million in sales by 2028, I think you've previously talked about expected breakdown between Jeuveau and Evolysse in the U.S. Could you discuss the expected contribution from the ex-U.S. markets to that $700 million revenue target?

So as we look at the $700 million, we expect 10% to 15% of that revenue to come from OEM, approximately $100 million. The remainder will come from both the filler franchise and the Thompson franchise in the U.S. As I noted on the call, it's a $10 billion market that we've covered by the time we get to 2028. As David mentioned, about $1.8 billion of that market is the OUS market. This still leaves us lots of opportunities to outperform that number. It's clear that that's the low end of our long-range guidance, reflecting our confidence in the performance of our products and the opportunity size across geographies and product lines.

Our next question comes from Uy Ear with Mizuho Securities. Please state your question.

Hi guys, thanks for taking my question and congrats on hitting non-GAAP profitability. On the Restylane-L study, I was wondering if you could talk a bit about the differences or similarities in safety regarding bruising and swelling or any of the types of things that might have been notable. Secondly, could you elaborate on the market with millennials in particular for Lift? Just curious to see how that’s changing as historically these products have been used amongst older patients. Thanks.

I'll take your first question, Uy. In terms of the AE profile, when you're looking at them, they're pretty similar. If anything, if I recall correctly, the AE trends seem to favor Evolysse versus the Restylane product. Regarding swelling as an AE, it was similar, again, appearing to favor Evolysse. One consistent piece of feedback we've received is that one reason injectors prefer Evolysse product is because what you correct is what you get. You do not have to inject product and take swelling into consideration. The comment from investigators is that just correcting to your optimal correction is enough; no additional swelling must be managed.

When it comes to the demographics using fillers, you're correct; overall, fillers skew a bit older than neurotoxins. That said, there is a growing number of younger consumers becoming interested in filler treatments, particularly for lips, making that a gateway for the younger generation. From there, it evolves into other areas, such as cheeks, where older individuals tend to receive treatment. The overlap between those using our toxin and those using fillers is quite notable, providing us with a unique opportunity to cater to various demographics. We offer a full range of products to meet diverse needs. Our goal is to understand how best to position each brand and what it means for our consumer segmentation.

Do you foresee expanding our reach beyond spas?

Yes. Our business today, as you noted, the largest customer group is the medical spa channel, followed by derms and plastics. We recognize that for the category, medical spas are the largest group that conducts these treatments. We know that dermatologists and plastics tend to use more filler per treatment than medical spas. Overall, I do believe this will accelerate our expansion into new customers. Customers have expressed interest in working with us, particularly in light of the new filler product. We believe this will be another growth driver, especially as new practices see the value from our product in clinical data relative to their existing products.

Hi, good afternoon and thanks for taking the questions. David, following up on that last question regarding adding Evolysse fillers, could you discuss whether you think there’s a greater opportunity for you to add new accounts or to penetrate deeper into accounts using Jeuveau but still relying on competitor products for their filler needs?

Recognizing that the simple answer is to suggest one or the other would be an oversimplification. We have sales reps deployed across the U.S. that cover a range of customers, from our existing users that are very loyal, which I hear first-hand would love to have Evolysse in their hands. We expect our existing customers will want access to trial the product. We've also encountered customers considering partnering with us on Jeuveau and Evolysse. The compelling data and technology make the case for partnership quite appealing. Thus, I believe it will be a mix of both. It's challenging to determine which aspect will be a significant contributor at launch. However, it's clear that after five years in the market, our successful track record and the quality that we deliver align us philosophically with these practices as we introduce new products. We must continue demonstrating that we offer high-quality differentiated fillers with unique advantages. Many customers are excited about this opportunity; our dedicated team is actively strategizing our commercialization plan, which will reflect a different approach to market entry. We expect to make thoughtful investments in bringing products to market, and we'll keep you updated as we progress.

Our next question comes from Balaji Prasad with Barclays. Please state your question.

Good morning. This is Sha on for Balaji. Thanks for taking our question. It has been two quarters since DAXXIFY changed its pricing strategy. Have you seen any impact on the growth uptake of Jeuveau? How do you expect market shares to change with DAXXIFY pricing aligning more closely with Botox now? Thank you.

Thanks for the question. With every new entrant, we aim to establish our value proposition in the market. As you pointed out, the latest entrant made a significant shift in pricing strategy early in their launch. During the fourth quarter, we saw their competitor in the market with a new pricing structure, yet we delivered growth. We've maintained that the entrance of a new competitor doesn't change our focus. We believe in our brand's strength, which has been built from the ground up for millennials. Our brand strategy focuses on aligning with our customers' values. We've constructed our identity around a digital platform aimed specifically at younger consumers, and we expect this strength to drive our continued success irrespective of competitive dynamics. So far, we don't anticipate any changes to our pricing strategy or promotional tactics. We are proud of our team’s performance, and we expect to see robust execution moving forward. As we look to the next 18 months, we've built the infrastructure to support Evolysse's growth. The ongoing strength of our flagship product and increasing brand loyalty will lead to substantial growth this year as we expand our presence domestically and internationally. Together with our strategic execution and the growth of the Evolysse and Estyme products, we are on course to meet our revenue target of at least $700 million by 2028. I am proud of the innovative culture we've fostered at Evolus and the determination exhibited by our team. We'll continue to distinguish ourselves in the marketplace, aiming to outperform competitors with a robust brand, proven products, a digital infrastructure, and a strategic focus catering to millennials. The momentum we have observed in our business, along with the impressive results from Q4 and full-year 2023, further validates our business model and the strong competitive position we've established as a cash-pay-focused aesthetics company. Next week, we will participate in both the Leerink and Barclays Conferences in Miami. We look forward to seeing you all there. Thank you for joining us today.

Thank you. This concludes today's conference call. You may now disconnect your lines. This concludes today's conference. Thank you.