Sientra, Inc. (NASDAQ:SIEN) Q4 2022 Earnings Call Transcript

A good example is, as we started this year, we had a great opportunity to go after our accounts receivable balance to actually free up some cash. We are very successful but we actually front loaded the year with multiple million dollars worth of effort to actually get that where we wanted to go. So those are nonrecurring efforts that we’re going to ’23 that does not affect sales and does not affect our ability to deliver products.

Jon Block: And maybe just a follow-up question. The $22 million to $23 million for , clearly, you’ve got good visibility considering where we’re sitting in the quarter. But Ron, maybe if you can give a little bit more detail, the construct of that number. You mentioned there’s concerns from a banking perspective, there’s also just a lot of concerns on the consumer in general. So how is the consumer holding up, maybe what are you seeing in the augmentation market into 1Q as much color you can provide and how that compares to recon?

Ron Menezes: I’ll let Lisa address that. But from a split — it’s kind of even split between now recon and aug. But go ahead Lisa?

Lisa Rosas: So a couple of things in the market. Obviously, the last few years have been fairly unusual but we continue to monitor the trends and have access to data. So we’re seeing potential signs of an improvement, particularly on the augmentation side. And that segment in breast augmentation in the US has always been durable where the underlying demand is there and eventually does materialize, which we’ve been able to validate more recently in reaching out to a group of considering patients just to get sentiment. And what we found is that there’s more consideration compared with last year, about 45% higher, which gives us some confidence that that market could correct or at least somewhat correct. So we are not completely relying on market trends and do see our numbers relative to category performance, and we continue to implement strategies to grow our business.

And we’re taking a somewhat conservative approach in terms of augmentation as we shift more to reconstruction. And in the recon market, that market has been very strong. Last year for the full year was up 10% at the category level based on capital purchases. And there was some pent-up demand from the pandemic coming from that but this has, over time, also been a very stable market. And then again, on the Sientra side, we’ve been able to make inroads as a brand doing all of the things that we’ve been doing. In Q4 alone, we grew 10 times faster than the market. So between the two, again, we’re going into the year. All of this has been integrated into what our guidance is for both segments of the business.

Jon Block: And maybe I’ll kind of slip in one last one quickly. You guys have been very explicit revenue and OpEx guidance. The fourth quarter gross margin was a good snapback. I think you’ve mentioned certainly in the past, the fat transfer product was accretive to gross margin. For SimpliDerm is that the same case as well? And then as a result, should we expect GMs to work their way higher throughout the year as the contribution from the new products also improves throughout 2023?