Establishment Labs Holdings Inc. (ESTA) Q3 2026 Earnings Call Transcript

Good morning. Welcome to the Establishment Lab's third quarter 2026 earnings call. At this time, all participants are in a listen-only mode. At the end of this call, we will open the line for a question-answer session, and instructions will follow at that time. As a reminder, today's call is being recorded. I will now turn the call over to Malavika William, BP, Global Head of Corporate Communications and Marketing. Please go ahead.

Thank you, Operator, and thank you, everyone, for joining us. With me today is Peter Caldini, our Chief Executive Officer, and Sondra Harris, our Chief Financial 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 within the meaning of federal securities law. These include statements of Establishment 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. I'd also like to remind you that our comments may include certain non-GAAP financial measures with respect to our performance, including but not limited to sales results, which can be stated on a constant currency basis, or EBITDA, which we disclose on an adjusted EBITDA basis. Reconciliations to comparable GAAP financial measures for non-GAAP measures, if available, may be found in today's press release, which is available on our website. The content of this conference call contains time-sensitive information, accurate only as of the date of this live broadcast, October 29, 2026. Except as required by law, Establishment Labs undertakes no obligation to revise or otherwise update any statement to reflect events or circumstances after the date of this call. With that, it is my pleasure to turn the call over to Peter.

Good morning, and thank you for joining us. Q3 was another strong quarter for Establishment Labs as we gained market share and expanded the breast aesthetics category through innovation. Q3 revenue was $72 million, an increase of 33.9% year-over-year, driven by U.S. market share gains and growth across our OUS business. Adjusted EBITDA increased to $6.4 million from $1.2 million a year ago, representing an 8.9% adjusted EBITDA margin and reflecting increasing operating leverage as we scale. Q3 marks our first quarter of positive free cash flow, a major milestone, and we are looking forward to our first year of positive free cash flow in 2027. Our U.S. business generated $26 million in revenue, up 119% year-over-year. Revenue outside the United States increased 9.7% to $46 million. Both businesses contributed to our growth, demonstrating momentum across our global operations. Our minimally invasive platform is an important growth driver, generating approximately $9 million in third-quarter revenue, an increase of 124% year-over-year fueled by our U.S. expansion. Sequentially, revenue was lower, reflecting normal summer seasonality in our OUS direct markets. Minimally Invasive represented approximately 15% of our year-to-date revenue, with the U.S. contributing nearly half of the platform's third-quarter revenue, reflecting its growing adoption. We now expect Minimally Invasive revenue to exceed $40 million for the full year, up from our previous guidance of more than $35 million. We achieved an important financial milestone in the third quarter, generating positive free cash flow for the first time in our company's history. Operating cash flow was $7.7 million, and free cash flow was $5.1 million. This is a significant achievement, particularly as we are investing in our U.S. expansion and innovation pipeline. It demonstrates the increasing scalability of our financial model and our ability to translate revenue growth into cash generation. Our third quarter performance is particularly noteworthy given the historical seasonality of our industry, with Q3 typically representing the softest quarter of the year. Our fourth quarter is off to a strong start, giving us confidence to raise our full-year 2026 revenue guidance to more than $274 million, up from a previous range of $269 to $271 million. Our U.S. and OUS businesses are both delivering strong performance with increasing momentum and opportunities for further growth. Our 2026 success should carry over to 2027, and we expect 25% revenue growth next year. Starting with the United States, we ended the quarter with 2,100 accounts. Although we are regularly adding new accounts, our focus is increasingly on utilization within our existing base. We have made substantial progress establishing Motiva in the U.S. market, including among many of the highest volume breast augmentation surgeons. With this foundation in place, our focus is shifting towards capturing a greater share of their business. A recent industry survey reinforces this opportunity. Among surgeons reporting Motiva usage, Motiva represented an average of 43% of their implant procedures, highlighting both the adoption we have achieved and the runway for further growth. Importantly, 85% of the accounts that ordered Motiva in Q2 reordered in Q3, reinforcing that plastic surgeons aren't just trying Motiva implants, they are adopting it in their practices. The October FDA approval of additional Motiva sizes, which we expect to make commercially available before year-end, will give surgeons more options for their patients. Industry data is not well reported, but our estimates have Motiva at approximately 30% share of the U.S. augmentation market exiting September, significant progress in just two years. According to data from American Society of Plastic Surgeons, U.S. breast augmentation procedures grew 11% from 2024 to 2025, following years of relatively limited category growth. The introduction of Motiva implants and Preserve are certainly helping to renew interest in the category alongside other market factors. Our strategy is not simply to take market share. It is to expand the market through innovation and broaden the number of patients considering the category. Preserve represented approximately 17% of our U.S. revenue in the quarter, and more than 400 surgeons were trained by the end of the quarter. Demand for training remains strong, and we expect 500 surgeons trained by year-end. Much like our core Motiva implant business, our focus is now shifting towards increasing utilization among plastic surgeons already trained on Preserve, creating additional growth potential within our existing surgeon network. Surgeon Feedback provides further insight into adoption. In a survey of 78 Preserve trained surgeons, respondents reported that approximately 22% of their breast augmentation procedures had shifted to Preserve. 95% reported being satisfied or very satisfied. In addition, 88% said Preserve had attracted patients who previously were not considering augmentation, and 98% reported patients asking for Preserve by name. These survey responses are consistent with the adoption trends we are seeing. Let me share two examples that illustrate what we're seeing in the market. One surgeon in the Northeast reported that since the launch of Preserve, 89% of her primary breast augmentation patients have chosen the procedure. Another plastic surgeon who underwent Preserve herself shared that as a young mother and a practicing surgeon, she would not have considered breast augmentation after having children without this option. Following her procedure, she was able to fly two days later, returning to surgery three days later, and attend a major conference by the end of the same week. These examples illustrate not only how Preserve is gaining adoption within existing practices, but its potential to bring new patients into the breast augmentation market. Consumer awareness is building. Preserve received an Allure Best of Beauty Breakthrough Award this quarter. It was also featured in Forbes, positioning Preserve as the Rolls-Royce of breast augmentation. These recognitions reinforce the growing awareness of Preserve among surgeons and consumers. Outside the United States, revenue increased 9.7% year-over-year to $46 million, with growth across both our direct and distributor markets. Our direct markets delivered year-over-year growth of 16% during the quarter, with particular strong performance across Europe. Growth was broad-based, with Italy, the UK, and Germany among the largest contributors. Sequential performance reflected a typical summer seasonality in these markets. We are seeing the benefits of the investment we have made in the direct businesses, including strengthening leadership, increased commercial focus, and the growing contribution from our minimally invasive platform. Our distributor business also performed well, with strong contribution from Asia Pacific. Distributor markets represented approximately 60% of our OUS revenue in the quarter versus 50% that we expected, reflecting the variability in the timing of orders characteristic of these markets. Looking ahead, we see opportunities across both channels, supported by our established direct market presence, distributor relationships, and the growing adoption of our minimally invasive platform. Together, these provide multiple avenues for sustained OUS growth. An increasingly important component of our OUS growth strategy is minimally invasive, where we are seeing broad adoption of Preserve and MIA. Minimally invasive revenue, OUS, grew 16% year-over-year during the quarter. Indications are that minimally invasive is becoming an important entry point into the Motiva ecosystem. Nearly half of all our new accounts in Europe during the quarter started with Minimally Invasive. At the same time, we are expanding within our existing customer base with the established accounts adopting Minimally Invasive as well. MIA and Preserve are not simply additional products being sold into an existing customer base. They are increasingly bringing new surgeons and practices to establishment labs while creating meaningful growth within established accounts. The recent U.S. FDA approval of additional Motiva implant sizes, including sizes as small as 105 cc, expands the choices available to surgeons and patients. The growing ballerina or yoga breast trend reflects increasing demand for smaller, more natural looking results. This approval expands the choices available to women seeking a more subtle aesthetic while representing an important step towards broadening our minimally invasive platform in the United States. We also announced plans to expand sizes for both Mia and Preserve globally. With this, Mia will be able to accommodate sizes of up to 300 cc's, and Preserve will be able to accommodate up to 380 cc's, allowing more patients the option to get a minimally invasive breast augmentation procedure. Another important development is our recently disclosed agreement with NewSill, a strategic supplier. This agreement strengthens the foundation of our long-term silicone supply relationship and supports our ability to scale production. Pricing is structured around volume commitments, with adjustments generally aligned with inflationary trends. It represents another important step in positioning establishment labs for sustained growth. Ahead of our anticipated FDA approval for Motiva implants in reconstruction, we are building the commercial infrastructure and hospital relationships with our Motiva Flora tissue expander. Motiva Flora is now available in more than 350 facilities nationwide, an increase of 14% during the quarter. Our reconstruction submission is progressing. We have responded to the FDA's current information request, and BMO inspections have taken place at multiple clinical sites, including the sponsor site, as part of the review process. These inspections are a routine part of the approval process and should be an indication we are closing in on an approval. We are evaluating regulatory pathways for Ergonomics 2, MIA, and GEM products in our biggest markets. Over time, broader availability of our portfolio will create further opportunities for growth. With that, I'll turn the call over to Sandra to discuss our financial results in more detail.

Thank you, Peter. Our third quarter financial results reflect revenue growth and improving adjusted profitability as we scale the business. Revenue for the quarter was $72 million, an increase of 33.9% compared with $53.8 million in the prior year period, with growth across both our U.S. and OUS businesses. In the United States, revenue increased 119% to $26 million, representing 36.1% of total revenue compared with 22.1% a year ago. Outside the United States, revenue increased 9.7% to $46 million. Turning to gross margin, GAAP gross profit was $49.7 million, representing a gross margin of 69.1% compared with 70.1% in the prior year quarter, excluding $1.3 million of restructuring-related inventory charges, adjusted gross margin was 70.8%, and improvement of 70 basis points year-over-year, driven by favorable U.S. and minimally invasive product mix. Adjusted gross margin improved sequentially, supported by continued growth in the U.S. and minimally invasive platform, with the benefit partially offset by a higher mix of OUS distributor sales, which represented approximately 60% of OUS revenue versus our planned 50%. Turning to operating expenses. Gap operating expenses were $52.3 million compared with $41.7 million in the prior year period. Third quarter operating expenses included litigation-related costs, restructuring and transition activities, and other items we exclude from certain adjusted measures. These exclusions are detailed in our non-gap reconciliations. Excluding these items, adjusted operating expenses were $49.6 million, representing 68.8% of revenue, compared with 77.6% in the prior period. This represents 880 basis points of operating expense leverage. On a GAAP basis, EBITDA was a loss of $0.9 million, compared with a loss of $2.2 million a year ago. Adjusted EBITDA increased to $6.4 million compared with $1.2 million in the prior year quarter. Adjusted EBITDA margin expanded to 8.9% compared to 2.2% a year ago. These results reflect our ability to translate revenue into improved adjusted profitability. We remain focused on investing in commercial expansion while building an efficient and scalable operation model. On a gap basis, our preliminary net loss was $10.7 million, or $0.35 per share, compared with a net loss of $11.1 million, or $0.38 per share in the prior year period. Turning to cash flow and our balance sheet, we generated $7.7 million in operating cash flow and $5.1 million in free cash flow in the third quarter, marking our first quarter of positive free cash flow in the company's history. This milestone reflects strong revenue growth, improving profitability, and our continued focus on working capital management. We ended the quarter with $75.8 million in cash and cash equivalents. In addition, the payment-in-kind interest provision under our refinanced debt facility provides more than $5 million in quarterly cash interest savings during the initial pick period, Giving us additional flexibility to accelerate our U.S. expansion and invest in our innovation pipeline. Looking ahead, we remain focused on sustaining positive cash generation while maintaining a disciplined approach to working capital and strategic investments that support long-term growth. Turning now to our outlook, as Peter mentioned, we now expect full-year 2026 revenue to be more than $274 million compared with our prior guidance of $269 million to $271 million. Full-year adjusted gross margin should be aligned with our year-to-date performance of approximately 70.7%. This reflects stronger-than-anticipated OUS distributor sales, which generate additional revenue and gross profit dollars, albeit at a lower margin percentage than our direct business. Our full-year adjusted operating expense guidance remains unchanged at $195 million to $200 million. Our updated guidance supports our expectation of positive adjusted EBITDA for the full year, reflecting the increasing operating leverage of our business as revenue grows. Having achieved our first quarter of positive free cash flow in Q3, we remain focused on sustaining this momentum and delivering positive free cash flow in fiscal 2027. We expect growth in 2027 to be 25%, supported by increasing utilization in the United States, broader adoption of our mentally invasive platform, and opportunities across our OUS business. I'll now turn it back to Peter for closing comments.

Thank you, Sandra. Q3 was an important quarter for Establishment Labs and demonstrates the progress we are making across nearly every part of our business. We have always believed that innovation expands this category, and we are seeing that prove out in both our U.S. and OUS businesses. We have multiple avenues for growth and are building a highly scalable financial model. As we look forward to 2027, we see meaningful opportunities to build on this year's progress. Increasing utilization across our U.S. account base, broader adoption of our minimally invasive platform, and the potential expansion into reconstruction provides several paths for growth. We are encouraged by the opportunities ahead while remaining focused on execution and improving financial performance. Operator, we're now ready to take questions.

Thank you. We will now conduct a question and answer session. If you would like to ask a question, please press star 1 on your telephone keypad. Please ask one question and then return to the queue for additional questions. A confirmation tone will indicate your line is in a question queue. You may press star 2 if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment while we vote for the first question. The first question comes from Mike Madsen with Needham & Company. Danny, please proceed.

Yeah, thanks for taking my questions. I guess I wanted to start with the international markets. I think there had been some concern maybe among investors about kind of the outlook there, everything going on from a macro perspective. You know, obviously 10% is really good growth, but I'm just curious, you know, what you're seeing in terms of the market performance for breast implants outside the U.S.? You know, have you seen any sort of slowdown in the market growth and maybe establishments just outperforming, or are the markets really healthy there?

Yeah, thanks. Thanks, Mike. I mean, regarding the OUS markets, I would say from a market performance overall, I would say the regions have been pretty stable, right, with a few exceptions. Obviously, the Middle East being one of them, you know, with the ongoing conflict, and, you know, clearly that's had an impact on the market. It's also had an impact on our performance in that region. We are getting orders for the Middle East, but it's clearly not at the same level we've had historically. But in general, the markets are very stable, and, you know, our focus, we're very pleased with the performance we've had in OUS markets. You know, a big focus for us was on the direct markets, and we again had 16% growth this quarter. This is like our sixth quarter of double-digit growth in our direct markets, and that's been a priority for us. We've optimized our leadership team, put more resources in those markets, and it's also we've really changed the way we've operated the relationships with our distributor markets. So the trends are very strong. We're well-positioned to finish the year, and that's going to really continue into 2027.

Thank you. The next question comes from Alan Gong with J.P. Morgan. Please proceed.

Thanks for the question, and congrats on the strong quarter. I had one question on minimally invasive to start, definitely seeing strong year-over-year growth. But if we look at, you know, second quarter and first quarter, we saw, you know, $9 million in the first quarter, increasing to $12 million or so in the second quarter. So it looks like it's taking a step back in the third quarter. Is that just a function of, you know, normal seasonality? Is that a function of the market maybe being a little bit more sensitive to more expensive products? Help me understand that dynamic.

Yeah, thanks, Alan. Yeah, it's really driven by seasonality. A big part of our minimally invasive platform, OUS, is in our direct markets in Europe, and as you know, the seasonality is very – it's a very weak season in Q3, and so that's had an impact in terms of the level of procedures, not just within minimally invasive, but overall. So that's impacted it when you look at quarter over quarter. But when you look at versus a year ago, we've had significant growth in those markets. But it's really been driven just based on the seasonality.

And Alan, just as a reminder, we've raised our expectation for minimally invasive as well to over $40 million.

The next question comes from Joshua Jennings with TD Cowan. Please proceed.

Hi, this is Colin on for Josh. Thank you for taking the question. You guys have seen a lot of momentum in account additions in the U.S., but I was hoping you could talk about how you plan to move that 43% Motiva utilization higher among existing users and maybe how much opportunity there is to reach new doctors in the practices you already have a foothold in. Thank you.

Yeah. So thanks, Colin. You know, we've been very happy with the penetration that we've had into the number of accounts. And, you know, we're in over 2,100 accounts. But as you mentioned, it's all about right now is about the utilization. We're making great progress in that area. That's been a focus for us. And a lot of it is really driven just by the normal scheduling pattern. Once you get into account, it can take some time before they actually start using it based on the schedules, also getting accustomed because Motiva performs a little bit differently than what they're accustomed to. But from a sales standpoint, Salesforce standpoint, also our marketing activities is really focused to increase that utilization, and we're seeing that benefit. When you look at month over month, the average orders per account continues to increase, and that's a good indication that we're increasing that utilization. And that 43%, as you mentioned, we expect that to go up. We see that's good traction, but it's also good room for opportunity for us to grow.

Thank you. The next question comes from Matt Taylor with Jeffries. Please proceed.

Good morning. Thanks for taking the question. Congrats on a nice quarter and generating some free cash flow. I guess I wanted to ask, you've talked about 25% growth in 2027. I was wondering if you could provide any color on how to think about margins or cash flow next year as we update our models.

Yeah, absolutely, Matt. So, as we think about next year, you know, we've targeted an expectation of 25% revenue growth, and that's supported by our growth of our U.S. business and that minimally invasive platform. We also see that as opportunities for further gross margin expansion. As U.S. grows beyond 35% of our revenue and our minimally invasive exceeds 15%, you know, we still believe that that 50 to 100 basis points is a reasonable improvement in our gross margin, Just based upon that geographical mix. So, ultimately, we believe the 50 to 100 basis points for FY 2027, and that will be dependent somewhat on geographic and channel mix.

Thank you. The next question comes from Sam Eber with BTIG. Please proceed.

Hi. Good morning. Thanks for taking the questions here. Maybe just coming back to the efforts to increase utilization at those existing 2100 accounts. Maybe talk to me about some of the investments you need to make, whether it's on the commercial team or any sort of direct-to-consumer initiatives that you're really going to be focusing on here to get that number higher.

Yeah, thanks. Thanks, Sam. As I mentioned, part of it is just the natural progression once you do get an account, you know, as they work through their schedules and also as they start using it and, you know, have some experience with it. But in terms of the investment, it's really about the additions to our sales force. We've increased the number of reps up to 55. We've also added additional leadership roles. And a big part of that is targeting and ensuring that we increase the utilization. And the marketing activities is going to be what we've been doing in the past. We can do more targeted investments in certain accounts, and we've been doing that in the past. And I think that's something we're going to continue to do moving forward. So those are kind of the type of levers that we're using to improve the utilization. And we're seeing the impact thus far.

Thank you. The next question comes from Joe Federico with Stifo. Please proceed.

Hi, everyone. Thanks for taking my question. Maybe just to zoom in a little bit on gross margin, you know, in the quarter, and I understand, you know, that the geographic mix played a role With the strong international sales and distributor markets within that, but for the year, with the guide coming down, I'm just trying to understand maybe the impact a little bit on the 4Q margin, given the implied revenue doesn't really change much. Is the margin there also mixed dynamics with the international, you know, just total sales maybe being above current estimates? And then what does that mean for the U.S.? Any help with some of those moving parts would be great. Thank you.

Yeah, Sam. So our adjusted gross margin was 70.8% in the third quarter. It actually was 70 basis points higher than last year. That really does reflect the growth of the higher margin U.S. business, which increased from 22% last year to 35% this year. As you point out, the difference relative to our expectations, we had originally guided 71.2 to 72.2, was really the stronger contribution for this OUS distributor business. And with that distributor mix, we had planned for it to be around 50%. It actually ended up being 60% of the OUS business for the quarter. It's really positive from a gross profit dollar and revenue dollar perspective, but it does moderate our gross margin percent, which is what you see in the quarter. As for our updated full-year guidance, for the first nine months, we're averaging around that 70.7. So with three-quarters of the year behind us, even a more favorable direct versus distributor mix in Q4 would have a relatively limited impact for our full-year average, and that's why we've adjusted our guidance going forward for that. I mean, what's important is that the underlying margin drivers still remain intact. You know, our U.S. and minimally invasive businesses continue to grow. We see further opportunities for margin expansion, and then ultimately, you know, our outcome is influenced by geographic and channel mix, but I'll just reiterate that we do believe that 50 to 100 basis points is there for the future.

Thank you. Our next question comes from Anthony Patron with Mizuhu Group. Please proceed.

Thanks, and congrats on a quarter here. Maybe two quick ones. Pete, maybe on the implant sizes, you have, you know, FDA clearance here of smaller implant sizes. You're also looking to launch larger platforms. So how much of the U.S. market, you know, was not addressed with, you know, sort of where the portfolio was 90 days ago, and now that you have a broader suite of implant sizes, how much of the market in the U.S. has actually opened up? And if you could just touch on what the funnel of hospitals looks like for reconstruction, you know, how many VAC committee sort of processes do you think you can be involved with out of the gate post an FDA clearance for reconstruction? Thanks.

Yeah, thank you, Anthony. In terms of the smaller sizes, which we got approval recently, and we're expecting to be those sizes in the market by year's end, you know, what we've historically said, it represents about 10% of the market. So I think it really opens up a significant opportunity for us in the U.S. market, and it's also another driver for that utilization in a number of accounts. So that's a key driver for us. And then in terms of the VAC process, I mean, one thing to keep in mind that we've already in about 350 hospitals through the flora, so that's a good starting point for us. You still have to go through that VAC process. You know, and it depends on the different hospitals what that timeline is. Some can be very quick. Some can be, you know, shorter. But it's anywhere between, you know, three to six months is what we've seen in the past. And it's, you know, we've, as I mentioned before, we're building out those capabilities to be in a position that we can accelerate through that process. So it's not going to be the number of committees. It's going to be more around the timing.

And Anthony, just as a reminder, we're in over 350 facilities today with our fluorotissue expander, so even though we have to go through a back process for, you know, reconstruction on the implants, that's still a great start with the relationship.

Thank you. Our next question comes from Caitlin Roberts with Canaccord Genuity. Please proceed.

Hi, thanks so much for taking the question, and congrats on a great quarter. Just touching on recon a bit more, are you gearing up from a commercial team standpoint already for the potential expansion there? And any thoughts on competitive dynamics as you look to potentially enter the recon market?

Yeah, thanks, Caitlin. Yeah, we've started the process of building out our commercial capabilities. I mean, as I mentioned before, we've increased the number of reps to 55. We're going to be doing that throughout the remainder of the year, so we expect that to increase. We've also built out some of the leadership position specifically to address the requirements for the hospital network. Also, some of the internal capabilities to address that channel. So, we're really putting that investment because we see this really in the short term.

Thank you. The next question comes from Joanne Winish with Citi. Please proceed.

Good morning. This is Anthony Alford, Joanne. Thanks for taking our question. Just a follow-up on the recon. I appreciate the updates on the process. Are you able to provide an update on when you expect to get that approval and if those clinical sites inspections are the last step or if there's any more steps in the process? Thank you.

Yeah, thanks for the question. I mean, first, I'd say we're very happy with the progress we're making through the recon approval process. It's, you know, it's going as expected. We've provided the responses, the FDA information request, you know, the BMO inspection have been undergone, and we've also had the sponsor site. So it is a normal part of that process. We can't say that it's completed, but we're very confident that we are in a very good position to get that approval, and we can never predict the timing of the FDA, but we're confident that that's going to be in the near term. And, you know, what we continue to believe is that it's going to be either the end of this year or the beginning of next. But everything is progressing as expected, and I think it's really showing good signs where we are.

Thank you. The next question comes from Mason Carrico with Stevens. Please proceed.

Hey, guys. Thanks for taking my question here. On recon, you've called out that Flora is now in more than 350 facilities. How many U.S. hospitals and centers perform meaningful volume of implant-based reconstruction, and do you have any insight into the share of total recon procedures that take place in the facilities where flora is already in use today?

Yeah, thanks for the question. So what we see in terms of the real volume, in terms of the number of accounts in the U.S. is probably, you know, close to 130 accounts in the U.S. And, you know, I think with the flora has gotten us into a number of those accounts, but there's still a number that we can't get in until we get, you know, get that, the recon indication was they want to bring in the entire suite of products. But what we see is generally, to answer your question, about 130 accounts, hospital accounts, it drives the majority of the volume.

The next question is from Anthony Patron with Mizuho Group. Please proceed with your follow-up.

I appreciate the follow-up. Just one on the 25% top-line guide, Sandra, for next year. Just curious, you know, to what extent that actually does bake in reconstruction, or is reconstruction upside to that 25%? Thanks.

Yeah, I mean, the 25% for 2027 is definitely showing our confidence in the continuing momentum of our Motiva business, the minimally invasive, our utilization increase across the U.S., and the market share gains we've been talking about. We also see reconstruction as a very important part of our long-term growth opportunity, and we believe the timing of the regulatory approval remains aligned with our expectations of, you know, later this year or first quarter of next year. So our 2027 outlook reflects our expectations for our business as a whole, including the opportunities across our portfolio.

Yeah, but, Anthony, just to add to that, I mean, with the VAC process, I mean, it does take a little bit longer than what we've seen in augmentation, which can accelerate very quickly up front. So, when we look at the revenue, the bulk of it, it's going to be in the back half of the year as part of that 25% growth.

Thank you. The next question from Joshua Jennings with TD Cowan. Please proceed.

Hi, this is Colin on again for Josh. I just had a quick follow-up on the international business. I'm just curious, given the distributor strength, whether there was any international pull forward and whether that impacted guidance in any way. Thank you.

Yeah, Colin, I think, you know, the pattern for our distributors we saw early in the year, right? We had a 14.4% growth in the first quarter. It was 4.4% in the second. Now we've hit 10%. So, you know, we're still confident in our mid-single-digit growth for the year, and as part of that, we've talked about that the timing of the distributor orders are always, you know, variable within our business. Again, we're very encouraged by the distributor orders. We've also been working with our distributors to get those orders closer to the demand in the market. We've talked about that, more of a make-to-order program. And so, you know, I think what we believe is that it's going to follow a similar pattern that it did in the first half of the year.

Thank you. The next question comes from Mike Madsen with Needham & Company. Please proceed.

Yeah, thanks for the follow-up. Just want to ask one on the new SOLE agreement. So, you called out sort of an inflationary adjustment in the new agreement. Was there something like that in the prior agreement? And if not, I mean, is there a chance that this could lead to some additional cost depending on inflation? And then maybe you can just put it into context by commenting on how much of your cogs is silicone, because I think there's just been a lot of, you know, focus on this from investors, and I'm not sure it's really that big of a part of the overall cost structure of the company, but.

Yeah, it's kind of business as usual. So it's very reflective, especially in the pricing terms and the volume tiers that we have to our previous contract. So we anticipate that to continue forward, that there's not a major impact. And as we've talked about in our margins, is that we do expect that any type of inflationary increases, we would look to pricing to help offset some of that margin as well. So from our perspective, the contract from pricing and volume is relatively consistent with the past.

Thank you. At this time, I would like to turn the call back to management for closing comments.

Yeah, thank you, Operator, and thanks, everybody, for joining the call today. Really appreciate that you've spent the time with us, and you can see the great progress we're making with the business. We look forward to the continued momentum as we finish 2026, but I think where our eye is actually going into 2027, we see a lot of growth opportunities. So very happy that you can be a part of that, and we look forward to seeing you in future conferences and future earnings calls. Thank you very much.

Thank you, ladies and gentlemen. This does conclude today's teleconference. Please disconnect your lines and have a wonderful day.