Sientra Inc (SIEN) Q4 2018 Earnings Conference Call Transcript

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Sientra Inc (NASDAQ: SIEN)Q4 2018 Earnings Conference CallMarch 12, 2019, 4:30 p.m. ET

Contents:

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  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:

Operator

Good day, ladies and gentlemen, and welcome to the Sientra's Fourth Quarter and Full Year 2018 Earnings Conference Call. (Operator Instructions) As a reminder, today's conference is being recorded.

And I would like to introduce your host for today's program, Neil Bhalodkar, with Sientra. Please go ahead.

Neil Bhalodkar -- Investor Relations and Business Analytics

Thanks, operator. In our remarks today, we will include statements that are considered forward-looking statements within the meaning of United States Securities Law. In addition, management may make 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 business, strategy, operations or financial performance.

A detailed discussion of the risks and uncertainties that the Company faces is contained in its previously filed 10-Q and in its annual report on Form 10-K that the Company will file with the SEC shortly. Actual results may differ materially from those expressed in or implied by the forward-looking statements. The Company undertakes no obligation to update or review any estimate, projection or forward-looking statement.

Today on our call we have Jeff Nugent, Sientra's Chairman and Chief Executive Officer; Paul Little, Chief Financial Officer, Senior Vice President and Treasurer; and Charlie Huiner, Chief Operating Officer and Senior Vice President of Corporate Development and Strategy; Oliver Bennett, General Counsel and Vice President of Complaints and Legal.

With that, I'll hand the call over to Jeff.

Jeffrey Nugent -- Chairman and Chief Executive Officer

Thanks, Neil, and good afternoon, everyone. Thank you all for joining. On today's call, I'll provide an overview of our fourth quarter and full year 2018 performance and review our near and longer term corporate objectives, before Paul provides detailed commentary on our financial performance.

Overall, we remain on track to achieve our goal of becoming a leading, diversified global partner to aesthetic physicians. Through 2018, we achieved a number of important milestones, including receiving FDA approval to manufacture our OPUS breast implant portfolio in Wisconsin. In our first full year of ownership, we meaningfully scaled with miraDry, a business which has proven to be a significant growth driver and validated our diversification strategy.

We also achieved robust pro forma sales growth for the full year 2018 with 18% and 104% year-over-year increases for breast products and miraDry respectively. In total, we achieved consolidated net sales of $19 million in the fourth quarter and $68.1 million for the full year 2018, which translates to year-on-year pro forma growth of 72% and 46% respectively, demonstrating our continued momentum.

Focusing first on our breast products segment, we realized numerous objectives in 2018 that I believe position Sientra for market leadership in 2019 and beyond. First, we achieved that FDA approval of our PMA supplement in April, allowing us to initiate commercialization of our Vesta manufactured OPUS branded silicone brand breast implant line. We remain committed to recapturing and growing market share, as we continue to ramp-up manufacturing capacity through the first half of 2019 and beyond.

Second, we published the results of our 10-year FDA core study, showing the long-term safety and effectiveness of our OPUS implants as demonstrated by our low reoperation, capsular contracture, rupture rates and incidence of ALCL. Third, based on the best-in-class safety profile of our OPUS implants, we launched the Sientra Platinum20 warranty program, the longest and most comprehensive warranty in the industry by far. The 20 year warranty is grounded in the confidence that we've gained in the 10 year clinical data and has already resonated significantly with plastic surgeons and patients alike.

Fourth, we have clearly advanced our position in the estimated $300 million US breast reconstruction market, which was our first significant move into diversifying our portfolio. I'm very pleased that we've achieved three consecutive quarters of sequential sales growth in our tissue expander portfolio, and we plan to aggressively leverage its clinical advantages to drive increased penetration of our hospital accounts through 2019.

Fifth, beginning in 2018 and consistent with her renewed focus on innovation, our R&D team remains actively at work, developing a pipeline of both incremental and substantial additions to our breast product portfolio, with the objective of providing our surgeon partners with the most comprehensive and advanced breast aesthetic solutions available on the entire market.

Finally, we remain on track for regulatory approval of our breast implant and tissue expander portfolios in Canada later in 2019, following the submission of our Medical Device License Application to Health Canada in the third quarter of 2018. We're excited about the prospect of becoming only the third company with FDA approval to sell breast implants into the estimated $500 million breast aesthetics market outside of the United States. Going forward, we will continue to explore the best path to leverage our unique breast products portfolio to expand into the highest potential ex US markets.

Before turning to our miraDry segment, I'd like to highlight Sientra's deep commitment to patient safety, which has been consistent since day one. At Sientra we're guided by science and scientific data has repeatedly confirmed the long term safety and effectiveness of all Sientra implants. We want women and their Board-certified plastic surgeons to feel confident in their decision to select Sientra's FDA approved breast implants for both their breast augmentation and reconstruction surgery. We're aware of the concerns surrounding some textured implants following the non-renewal of a competitor's CE Mark for their textured implant service.

It's important to keep in mind that there is an extremely low overall incidence rate associated with textured implants. According to the FDA, the risk for a woman with textured implants to develop ALCL is between 1 and 3,800 to 1 and 30,000. And in fact, the European Commission's Task Force recently noted that there is sufficient scientific evidence to limit (ph) the use of textured breast implants, as they provide positive clinical and psychological outcomes for their patients, and several other textured brands remain or retain their CE mark approval and remain in the market.

I also want to emphasize that it's important not to categorize all textured implants as one and the same. Each manufacturer employs distinct differences throughout the manufacturing and texturing process, resulting in various types of finished product available in the market. Therefore, the incidence rates for AlCO and other adverse events for that matter similarly have not proven to apply uniformly to all the implants and their manufacturers. The products differ.

Importantly, Sientra's OPUS implants have a significantly lower worldwide ALCL risk compared to our competitors. Researchers have estimated in a peer-reviewed publication, late in 2017, that the worldwide risk frequency in Sientra textured implants is as low as one in 200,000. Nothing remains more important to us than patient safety, and as discussed previously, our strong 10 year clinical data was actually the basis for launching our industry leading 20 year warranty.

We continue to work collaboratively with regulatory agencies, our physician partners, leading professional associations and patients to uphold our commitment to safety. We're looking forward to the FDA panel meeting later this month, which the FDA convenes periodically for all the medical device categories. The breast implant panel, which was last held in 2011 is being convened to ensure that patients and healthcare providers have accurate information on breast implants. Breast implant Associated ALCL will be one of several topics of discussion at the meeting.

The panel is also focused on how to better collect and utilize safety outcomes data and best practices for informed consent decisions between patients and the physicians. A recent dialogue with plastic surgeons indicates that consultants and consultations rather, and procedure volumes in the first quarter have declined modestly due to the media coverage of breast implants that has increased over the last few months. We expect this to potentially continue into the second quarter and impact the first half of the year.

I would note, however, that with history as our guide, to the extent that some women may be on the sidelines temporarily because of breast implant headlines, we expect once the FDA panel is complete, and the long term safety profile of breast implants is affirmed that women's concerns will mitigate and these patients will ultimately proceed with breast implant surgery.

Further, as the conversation between plastic surgeons and their patients, increasingly focuses on safety, Sientra's unique differentiation and advantages will be even more evident as clinical outcomes and the durability of our implants move to the forefront. With this backdrop, influencing broader US market conditions for 2019, we are confident that Sientra OPUS Gel implant portfolio is well positioned to continue to recapture market share, driven by increased customer conversion activities throughout '19, as implant supply levels steadily improve and new products are launched.

In light of this and our view of the near-term FDA panel being primarily a first half event, we expect to grow our breast implant sales by at least 25% for the full year 2019, compared to breast implant sales of $21 million in 2018.

With that, I'd like to focus on our miraDry segment, which we believe is also well positioned to remain a significant growth driver for Sientra. In our first full year with miraDry, we fully integrated operations, grew the commercial organization, implemented the streamlined miraDry fresh procedure protocol and reported four consecutive quarters of sequential growth. Our year-over-year growth on a pro forma basis of 104% in 2018, was driven by strong system placement and consumables growth, with particular strength in our international markets.

miraDry's performance in 2018 has validated our assessment that demand for miraDry, the only FDA approved permanent solution for underarm sweat and odor remains both large and highly under penetrated. As we look ahead into 2019, we will maintain focus on growing system sales in the US specifically, which will in turn provide an even stronger foundation for driving higher margin consumable sales in the medium to longer term.

Our strategy for miraDry remains focused on practice activation, building brand awareness to drive patients into the practice, asking for miraDry by name. In February, we appointed Kirk Gunhus as General Manager of miraDry. Kirk previously led our international sales and under his strong leadership, miraDry, gained significant traction internationally, achieving four consecutive quarters of sales significantly, over performance.

miraDry's innovative technology has tremendous runway for growth in the United States, and I'm confident that with Kirk's involvement, we will aggressively implement the same successful growth strategies in our US business that he developed while leading miraDry's international commercial organization. And in a similar leadership capacity that he held at ZELTIQ. In recent months, we have also expanded our marketing team with top industry talent while launching a new branded web platform.

In 2019, we expect investments in miraDry to accelerate our goal of building our millennial-focused, Digital Brand to target the estimated 100 million people worldwide, including 15 million in America who our market research indicates are bothered by underarm, sweat and odor and would be interested in a permanent solution like miraDry. Specifically, we kicked off our no sweat global campaign, placing cost effective, targeted digital ads across millennial focused digital platforms including Instagram, Facebook, Google and others, while leveraging social media influencers to build interest in miraDry.

During 2019, we'll also be supporting our digital direct to consumer efforts with national media and public relations campaigns, to further grow the market. We also expect to continue to benefit from an expansion of our co-op marketing strategy and lead generation efforts, which involve partnering with physicians to drive utilization. That in the end is the key to success. These efforts will help us to target consumers most likely to be interested in miraDry at the local level while helping to forge stronger ties with our physician partners. Importantly driving a digitally savvy and younger patient cohort into aesthetic focused practices benefits both Sientra and our physician partners.

Based on our research, approximately 75% of miraDry customers are between the ages of 18 and 44. Bringing these patients into the practice early represents a critical lifetime value opportunity for physicians, as most aesthetic practices focus on an older subset of patients. In fact, our market research indicates that nearly 85% of miraDry customers have never been in an aesthetic practice before. However, following their first visit for miraDry, we estimate that approximately 35% to 40% of them will return to the practice for other aesthetic treatments.

This is an extremely compelling value proposition, to physicians as they are considering miraDry to their suite of services. And we are rolling out specific tools for our sales team to accentuate this unique value as part of their detailing efforts. In sum, we are confident that coming out of a strong 2018 for miraDry, which we are, we believe we have identified and are executing on exactly the right initiatives to build on what is clearly a unique aesthetic lifestyle treatment. miraDry is still very early in its life cycle and we're pleased with the progress that we've made to prepare the business for real scale both in the US and OUS.

With that I will hand the call over to Paul, who will review the Company's fourth quarter and full year 2018 results in greater detail. And I'll be back later for a conclusion and open to questions. Paul?

Paul Little -- Chief Financial Officer, Senior Vice President and Treasurer

Thank you, Jeff. As a reminder, with the exception of adjusted the EBITDA, all of our financial metrics are reported on a US GAAP basis. Additionally, we will continue referencing an adjusted EBITDA margin, which we define as earnings before interest, tax, depreciation, amortization, fair value adjustments, legal settlement expense and stock-based compensation. Specifically, we are removing non-cash items and/or non-recurring items for this non-GAAP measure. Again, please refer to our supplemental financial information earnings release and 10-K for tables on GAAP and non-GAAP, pro forma net sales and a full reconciliation of adjusted EBITDA to its GAAP counterpart.

Consolidated total net sales for Q4 '18 was $19 million, an increase of 72% compared to total net sales of $11.1 million for the same period in 2017.

Total net sales for the full year 2018 were $68.1 million, an increase of 46% compared to 2017 pro forma net sales of $46.7 million. Within the breast segment net sales totaled $10.4 million for the quarter, a 28% increase compared to $8.2 million for Q4 '17. Total full year 2018, net sales for the breast segment were $37.0 million, an 18% increase compared to $31.5 million for the same period in 2017.

The increase was driven primarily by the continued traction of our OPUS implant relaunch and strong performance of our tissue expander portfolio, partially offset by relatively soft bioCorneum sales. Our miraDry business segment achieved net sales of $8.6 million in Q4 '18, representing a 196% year-over-year increase, compared to $2.9 million in Q4, '17. For full year 2018, miraDry net sales were $31.1 million, a 114% increase on a pro forma basis, compared to $15.3 million for the full year 2017.

Gross profit for the fourth quarter was $11.4 million, or 59.7% of sales, compared to gross profit of $5.3 million or 48.1% of sales for the same period in 2017. Gross profit for the full year 2018 was $41.3 million or 60.6% of sales, compared to gross profit of $22.4 million or $61.2 of sales for full year 2017. Changes in consolidated gross margin were driven by the overall mix between breast products and miraDry, as well as the geographic and capital versus consumable mix, within miraDry.

Operating expenses for Q4 '18, were $35.7 million, an increase of $13 million or 57% compared to $22.7 million of expenses for the same period in 2017. For the full year 2018, operating expenses were $121 million, an increase of $36 million or 42%, compared to $85 million of expenses for the same period in 2017. Operating expenses for the quarter were driven higher, primarily by increased investments in sales and marketing expenses, as well as higher stock-based compensation as we build out our miraDry commercial organization.

Adjusted EBIDA for the fourth quarter and full year 2018 was a loss of $19.5 million and $60 million, compared to a loss of $13.9 and $41 million in the same periods of 2017 respectively. The year-over-year increase in adjusted EBITDA loss can primarily be attributed to the inclusion of miraDry. Net cash and cash equivalents as of December 31, 2018 were $87 million compared to $103 million at the end of third quarter 2018.

I'll now turn the call back over to Jeff for his final closing remarks.

Jeffrey Nugent -- Chairman and Chief Executive Officer

Thanks, Paul. In closing 2018 is a year of significant progress in building the foundation for a strong long-term growth in both of our breast product and miraDry segments. We're encouraged by these results and committed to continue to build on what we've accomplished. I am more confident than ever in our long term outlook as a fully scalable, diversified global aesthetic company.

Throughout '19, we will focus intently on execution, execution, executing on our commercial strategy to deliver strong growth for both our breast products and miraDry segments that we will continue to drive as aggressively as we can; the establishment and leveraging of a highly visible, digitally focused brand for miraDry; continuing to build supply chain scale and efficiencies at Vesta and investing strategically in innovation and continued diversification across the business.

Last, I want to thank our extremely talented team for their hard work and dedication and we look forward to driving forward on our growth initiatives through 2019 and beyond. I'll now turn the call over to Q&A.

Questions and Answers:

Operator

Certainly. (Operator Instructions) Our first question comes in line of Jonathan Block from Stifel. Your question, please.

Jonathan Block -- Stifel -- Analyst

Great guys, good afternoon. Hopefully you can hear me, OK. Paul, I'm going to start with you and then Jeff, I'll pivot to you for the second question, if that's OK. I think the first one, Paul, just on the OpEx spend, it did come in a little bit higher than what we were anticipating in 4Q. I know you did have a lot of stock comp expense hit the P&L in 2018 but maybe if you can talk to us about the OpEx spend. Is that the run rate that we should expect getting into 2019? And then I've got the follow up.

Paul Little -- Chief Financial Officer, Senior Vice President and Treasurer

Sure, quarter 4 is a little higher as we ramped up spending in the miraDry business in the fourth quarter, starting in the third quarter, going into the fourth quarter. I'd say R&D and G&A were pretty much in line. It was a little heavier on the sales and marketing side in the other businesses. I wouldn't expect that quarter-over-quarter into this year, if you were to try to annualize that over four quarters, Jon.

Jonathan Block -- Stifel -- Analyst

Maybe just a quick follow-up to that same question, Paul, just -- are you willing to give us an estimated cash burn number that you anticipate in 2019, I don't know, if you want to get that granular or not?

Paul Little -- Chief Financial Officer, Senior Vice President and Treasurer

That's where I was. I mean, we've been communicating about a $15 million to $16 million average quarterly burn. You can annualize that -- for simplicity, that includes also a potential milestone payment in there for the miraDry acquisition.

Jonathan Block -- Stifel -- Analyst

Okay. Very helpful. And then, Jeff, I'm going to pivot to you and hopefully I got some of the helpful metrics you gave. So the consoles (ph) and speaking with the physicians have seemingly been impacted modestly, like you said in 1Q, you think that may persist into the second quarter. You're still comfortable with growing your breast product by 25% off the $21 million figure that you gave in 2018?

Maybe you can just help translate into what that means for share? In other words, does that reflect the same share gain assumptions as you would have anticipated three months ago, offset by a slightly more modest end market due to the ALCL concern? I guess what I'm trying to do there, Jeff is just tease out the rate of your share gains versus a softening end market due to some of the recent concerns. Thank you.

Jeffrey Nugent -- Chairman and Chief Executive Officer

John, that's a great question. And as you know, regular market share data is very difficult to get our hands on. But my overall assumption is that the -- call it, uncertainty of the FDA panel coming up in a couple of weeks is affecting each of the manufacturers in some ways similarly, in other ways more significantly. I would expect the impact is affecting Biocell and Allergan more so, that -- the short answer to your question is, I believe we have the potential to at least achieve the market share gain that we had previously contemplated.

And as we indicated that we're being conservatively realistic in providing the guidance that we expect to grow our implant business by at least 25% for the full year and that depends on what the total market does. But we're expecting share gains in the mid-single digit range, which is certainly a start to what we want to accomplish. We could talk more detail separately, but as you know, we're trying to keep to the facts, as based on what we already know is possible and right now, there's a fair amount of uncertainty.

Jonathan Block -- Stifel -- Analyst

Ok, very helpful, Jeff. I will follow up with you guys after.

Jeffrey Nugent -- Chairman and Chief Executive Officer

Thanks Jon.

Operator

Thank you. Our next question comes from the line of Anna Nussbaum from William Blair. Your question please.

Anna Nussbaum -- William Blair -- Analyst

Hi, guys. This is Anna on for Margaret. Hi, guys. To first start out on the breast side, as you guys are prepping for a full implant relaunch in 2019, are you guys happy with the sales and marketing investments that you've made in that regard? What changes should we expect this year in terms of advertising or anything else?

Jeffrey Nugent -- Chairman and Chief Executive Officer

Well, we've taken a much more direct, and I would say aggressive marketing campaign and messaging to our customers based on a number of things, not the least of which is the superior results of our clinical trials and that we've gotten positive response to-date, that as I indicated in my remarks, that as the results of the FDA panel become more clear and just to create realistic expectations, the panel is March 25 to 26, and that my experience with the FDA is that it takes a while for them to assimilate all the testimony and input from all the experts that they're involving.

I have detailed copies of their agendas for the two days, but the point I'm trying to make is that we're not going to know precisely what the FDA outcome is going to be. And that -- and I go back to saying that we expect this to impact the first half primarily, but we're providing as much information as we can at this point on full year objectives that will achieve the market share numbers that we previously had identified.

Anna Nussbaum -- William Blair -- Analyst

Okay thanks. And then, are you thinking about your sales force and its size in any different way just yet (ph)?

Jeffrey Nugent -- Chairman and Chief Executive Officer

Well, on the breast product side, we have a very loyal committed group, that as you know have been extremely loyal to us. And the advantage of that is that they have -- in my experience superior relationships with their plastic surgeon customers, both currently served and those previously served. So that we are considering expanding the number of PSCs to be able to accelerate bringing in past customers and expanding the ability to supply them with the increased output from our manufacturing facility.

So we don't have a specific number that we've locked on. But it's really a question of cost benefit and the revenue per rep assumptions that we can compare going back to 2015 as well as doing a comparable analysis with our competitors. So I'm not giving you an exact number because frankly those are decisions that we're in the middle of right now.

Anna Nussbaum -- William Blair -- Analyst

Okay. And then, if you allow me to pivot in the miraDry side quickly with Kirk on the helm now, how will his strategy potentially differ from the existing strategy for miraDry in the US. International miraDry I know Kirk has done particularly well, but how are those international and US markets similar or different? And how does Kirk plan to bring his expertise to the US?

Jonathan Block -- Stifel -- Analyst

Well, if I understand your question, you're really asking what are the advantages in our international approach and how do they differ from the domestic strategies? And the basic answer to that is frankly, with Kirk's leadership finally honed in his years at ZELTIQ, has established a very successful discipline that he's in the process of installing domestically. So we've got the experience of other similar businesses, CoolSculpting among others, and we have confidence that, that increased discipline is going to work.

I'm encouraged by what I'm seeing so far, and relatively early days with the new marketing campaign and strategy of building awareness, in addition to the increasing discipline on the part of both the sales reps as well as the practice development managers. This isn't the most complicated commercial strategy, but we'd like to share more in terms of how we're going about it. But it really is forming a much stronger partnership with the physicians and driving interested consumers from that 15 million target audience, and that we expect that to continue to accelerate through the year, while we also continue to grow the international side.

Anna Nussbaum -- William Blair -- Analyst

Okay, great. I appreciate it. Thank you.

Jeffrey Nugent -- Chairman and Chief Executive Officer

Thank you.

Operator

Thank you. Our next question comes from the line of Richard Newitter from SVB Leerink. Your question please.

Richard Newitter -- Leerink Partners LLC -- Analyst

Hi. Thanks for taking the questions. The first one just on the -- appreciate the at least 25% breast implant growth in 2019, and that the first half is going to be -- you're seeing some impact and you balance that in for the first half and market volumes moderate declines. But what exactly are you dialing in for the outcome of the FDA panel into the back half? And how have you factored in the possibility if at all that textured implants continue to go away.

Our math suggests that that's maybe a small, maybe $1 million to $2 million impact to your breast implant business. But is that contemplated in that 25% growth target. Any color would be helpful? Thank you.

Jeffrey Nugent -- Chairman and Chief Executive Officer

Yeah Richard, I think that you've made some, I think, very insightful comments previously and what -- to make it as simple as I can, given frankly our inability to forecast precisely on a quarterly basis, we realize that the FDA overhang is going to impact our first half quarterly expectations. But based on considerable input collaboration partnership with a number of well-known experts that we don't want to presume or get ahead of the FDA outcome. But the advice that we're given is that this panel is focused on evaluating the risk benefit of breast implants with an objective specifically to conclude with the development of action items for stakeholders to improve patient education and inform consent about the risks and benefits of breast implants.

And again, I don't want to get ahead of the panel's conclusions but the impact on Sientra for the year is, there is some downside softness in the first half that we expect to pick up in the back half because we expect a lot of the concern that I prefer to talk about uncertainty because that's really what it boils down to. There's a significant amount of uncertainty associated with the risks that we are expecting to be clarified, mitigated to a significant extent in the back half. Does that help?

Richard Newitter -- Leerink Partners LLC -- Analyst

That's right. So I guess just to simplify, it sounds like you are expecting some level of resolution on some level to that uncertainty into the back half. Is that a fair statement, Jeff?

Jeffrey Nugent -- Chairman and Chief Executive Officer

Yes. A mitigation of the uncertainty in the back half and look we're very familiar with the history associated with breast implants. And using history as our guide that we believe that there will be a responsible action taken by the FDA that at the end of the day will reduce the uncertainty about the risk associated, that we believe will pick up procedures in the back half of the year.

And there are several statistics and relatively recent summaries of augmentation growth from ASPS for the full year of 2018 where augmentation procedures grew by 4%, that we're trying to understand to what extent that may have been affected by some of the early concerns through the media.

But like I said, there is a modest indicator that is affecting first quarter consultations and procedures. But again, based on collective experience with a lot of people who go back decades on this that we're factoring in a mitigation of that risk for the back half.

Richard Newitter -- Leerink Partners LLC -- Analyst

Got it. And I just want to clarify, Jeff, when you talk about kind of a negative impact in the first quarter potentially lingering into the second, just order of magnitude, are we expecting to see possibly like -- is it 0% growth in breast implants in 1Q with a huge racheting in the back half or just maybe you have 25% for the year, something solid double-digit still in the first half is obtainable. Is that correct?

Jeffrey Nugent -- Chairman and Chief Executive Officer

Let me let Paul comment on that.

Paul Little -- Chief Financial Officer, Senior Vice President and Treasurer

I think, Rich on that -- we gave some flavor on the year, at that point, that's what we're going to give for just on the year, it's a yearly event and we're not going to give any -- get into the quarterly cadence at this point.

Operator

Thank you. Our next question comes from the line of Chris Cooley from Stephens. Your question, please.

Chris Cooley -- Stephens -- Analyst

Hey, good afternoon. and thank you for taking my questions. I apologize if I missed this, but I didn't hear you gave guidance for miraDry for the growth for the full year. And so while I fully had anticipated that with the uncertainty associated with the upcoming FDA panel that you might reserve establishing formal guidance for the year. You did give us a bogey for the breast implant business. So if I missed that, I apologize.

Could you remind me what the guidance is for miraDry, but if there wasn't a guidance, could you maybe help us understand why no guidance for the total company and also similarly for adjusted EBITDA?

Jeffrey Nugent -- Chairman and Chief Executive Officer

The issue of guidance has been discussed, for a number of quarters here. And that we are committed to providing guidance during 2019, but at this point, we've decided that it is not in anybody's best interest to provide guidance with this potential, and I'll call it uncertainty associated with the panel. So one of the...

Richard Newitter -- Leerink Partners LLC -- Analyst

Jeff, if I could interrupt you. You did provide guidance amid this uncertainty by telling us that you would grow the breast business 25% plus this year. More so in the second half, less so obviously in the first half, which we had already assumed in our numbers. I'm asking about miraDry and then the total company?

Jeffrey Nugent -- Chairman and Chief Executive Officer

And what I'm trying to explain is that we are delaying full company guidance and details associated with that guidance that we plan to share, when we get past this FDA panel. Now, guidance is a variable definition, but our intent is to provide more concrete estimates for the full year, which would include miraDry, as well as the latest information on breast implants. And at this point, it is interesting because we keep saying that we're not ready to provide guidance, and we've been consistent on that.

But at the same time, we've provided some fairly granular information to all of you. And I think the best way to answer that, in the absence of deciding to provide guidance today that we expect the miraDry business to continue to grow at an accelerated pace on both international and domestic sides.

And I guess the best way I can answer it again is that we're giving you a sense of confidence that the business is going to continue to make significant progress and that the difference between giving you information on breast implants is really driven by the fact that we know that because of the uncertainty, we want to give you a sense of our commitment to grow at least 25% given these new circumstances.

miraDry for right now I would leave it, that we continue to have very high confidence with a number of the things that we're aware of right now. But that we plan on providing you official guidance as early as the end of the second quarter, assuming that we resolve the primary issues that we're facing right now. So that's the best way to put it.

Chris Cooley -- Stephens -- Analyst

Understood. I appreciate the color. If I could just quickly, just on the -- maybe as my follow up, you alluded in your prepared remarks about expanding OPUS' availability to select international markets. And it would seem that would be very opportune at this juncture, especially without Allergan's removal from the marketplace.

Can you just address from both a capacity and from a capital structure standpoint if you have the wherewithal to do so right now and how you think about that moving forward, especially with what I'm assuming is an increase in terms of use of working capital to grow the miraDry installed base here in the US as we look to 2018? Thanks so much.

Jeffrey Nugent -- Chairman and Chief Executive Officer

Charlie, you want to talk about that?

Charles Huiner -- Chief Operating Officer and Senior Vice President of Corporate Development and Strategy

Yeah, and I will. Chris, let me just quickly address the guidance point that you made earlier, and just add on to Jeff's statement, because I -- we -- as Jeff mentioned, but just to clarify, we wanted to specifically provide the breast implant guidance this quarter or into this year, specifically due to what's going on with the breast panel. And we felt it was the right thing to do to give you sort of an anchor, to give you and analysts and investors an anchor, as it relates to our breast implant business. And so that was really the effort we made to provide some level of certainty and confidence around our breast implants.

So again, we -- as Jeff mentioned, going forward, our intent is to provide broader business guidance. But we thought, given the specifics of the panel and a lot of the questions and uncertainty around that, we wanted to provide our insights and color as validated by our guidance of breast implants for 2018. And hopefully that's a pretty -- for '19, and hopefully that's appreciated as it relates to that particular part of our business.

As it relates to our international business and capacity and capital structure, as we've made clear, our first objective is Canada. And Canada. It's sort of an extension in the sense of our North America -- or of our US business. It's an application we filed in third quarter of last year. And certainly we believe that, that's the next big step for us to be able to leverage our FDA approval and all of our clinical data through 10 years into Canada as an adjacent market.

And in particular, as we've been hearing now for many years, that Canada -- Canadian surgeons and patients are looking for choice, just as the United States market was looking for choice six or seven years ago. And they're asking for Sientra. So we feel very good about Canada, as the first step and our ability, frankly, to supply Canada, in line with our ramped supply from Vesta through this year.

As it relates to further international expansion, where as we mentioned, and Jeff mentioned in his prepared remarks, we are looking at other opportunities to expand our business into select international markets. You can expect we'll be very intelligent about the way we expand into international markets as opposed to the traditional way that many companies have done it, which is just to basically sell to everybody.

Our goal and objective is to develop the right strategy to pick the 10 or 15 markets where Sientra implants and our data can be most impactful, and to develop our go-to-market strategy around those.

Chris Cooley -- Stephens -- Analyst

Thank you.

Operator

Thank you. Our next question comes from the line of Alex Nowak from Craig-Hallum Capital. Your question, please.

William Fafinski -- Craig-Hallum Capital Group LLC -- Analyst

Good afternoon, everyone. This is actually Will Fafinski on for Alex today. So we've been bouncing around between a few different calls this afternoon. So apologies if this was already asked. But regarding inventory -- based on the current manufacturing schedules, when do you think you'll get out of a backlog situation?

I understand you have hundreds of SKUs, but when will you be at a point that you can comfortably be with inventory on hand and comfortably order more product when needed? Thanks.

Jeffrey Nugent -- Chairman and Chief Executive Officer

Charlie, you want to talk about that?

Charles Huiner -- Chief Operating Officer and Senior Vice President of Corporate Development and Strategy

Yes. So as I just mentioned in terms of supply, and as Jeff mentioned in the prepared comments we are pleased with the continued scaling and yields that we're seeing from Vesta, which are making their way through to increased supply quarter-over-quarter.

And we've said that pretty consistently, certainly since the fourth quarter that we expected that. And we've indeed seen that and that did allow us to open up some more aggressive conversion programs that we mentioned in the fourth quarter which did underpin some of the success we had with our breast products business during the fourth quarter. We expect to continue to see that ramping through the first half of this year as we mentioned in prepared remarks.

And in terms of, sort of, full supply, the first part of that and what we've been saying is that, we have sort of a core set of SKUs around our round implant line and we do expect that we'll continue to be at sort of healthy supply levels for those implants really through this year. And then we'll continue to work on some of those other implants in terms of building scale and supply through the first half of this year.

William Fafinski -- Craig-Hallum Capital Group LLC -- Analyst

Great. I appreciate it. Thanks. And then Jeff, I know this is going to vary among your customers, but when you look at your Tier 1 orange accounts, what does Sientra's implants share in those positions and how does this compare to the same time last year?

Jeffrey Nugent -- Chairman and Chief Executive Officer

We don't -- I do not have the specific share information among the core 200 that we've been focusing on the last couple of years.

What we have -- I can give you a rational estimate that among the current focused core customers, I would say we average approximately 50% of their -- the products they use in their procedures. That varies depending on the type of implant and whether it is a shape, ultra-high profile, larger sizes, et cetera, which we're moving aggressively to be able to supply from Vesta. And that's one source of growth to increase the share of our core customer base.

But I look at a more significant opportunity to be able to, like we've said in the remarks and a couple of times here, that with the increased availability of product, we have our PSCs are working aggressively with previous Sientra customers to bring them into the fold. And that net-net the -- our market share is going to be determined by a combination of first of all, those that we have, and we are serving, but at the same time, we know that we had a run rate close to between 13% and 15% market share in 2015.

And that was strictly limited with augmentation products. So we've got a very different profile right now. We're moving into reconstruction and having -- major progress we already have, is going to accelerate that market share target, based on how quickly we're able to penetrate not only the past Sientra customers, but also to expand into largely incremental reconstruction practices, which are largely controlled by hospitals and many of the larger hospital chains.

So I don't have that specific market share data, but that's going to be part of what we hope to include in our guidance in the very near future.

William Fafinski -- Craig-Hallum Capital Group LLC -- Analyst

Understood, I appreciate it. Thanks for that. And that's all for me. Thanks, guys.

Jeffrey Nugent -- Chairman and Chief Executive Officer

Thank you.

Operator

Thank you. Our next question comes from the line of Anthony Vendetti from Maxim Group. Your question, please.

Jeffrey Nugent -- Chairman and Chief Executive Officer

Hi, Anthony.

Operator

You might have your phone on mute. I am not hearing anything, Mr. Vendetti, you might have your phone on mute.

Anthony Vendetti -- Maxim Group -- Analyst

Okay, yeah, OK. So my follow-up -- my question is on the breast product portfolio, you said for breast implants what we talked about greater than $25 million or greater, it looks like there were $16 million in revenue in 2018. Can you tell us what you expect for the rest of the breast product portfolio excluding implants for 2019?

Jeffrey Nugent -- Chairman and Chief Executive Officer

Well, I think the 2018 implants number was $21 million, and that we're looking at a 25% increase on that. And again, that's an annual number that's going to be impacted by how quickly we're going to be able to bring online some of these additional SKUs like I said, larger sizes, shapes, et cetera, ultra-high profile and so forth.

This is not the most complicated medical device business, but there are a lot of pieces involved here. So I'd just like to verify that what we're talking about is a movement from $21 million with a 25% increase into 2019.

Anthony Vendetti -- Maxim Group -- Analyst

And so just to follow up, so the rest of the business around $16 million or so, is that pretty much static or do you expect some growth in that business as well?

Jeffrey Nugent -- Chairman and Chief Executive Officer

That gets too close to the guidance word. But I can say that we have high confidence in the entire breast products group, but I can't give you any specifics.

Anthony Vendetti -- Maxim Group -- Analyst

All right, shifting gears to miraDry, how many sales reps do you have now from miraDry in total, and then what's -- Kirk's or your view of what you need for 2019?

Jeffrey Nugent -- Chairman and Chief Executive Officer

The domestic number in total, including capital reps as well as practice development managers is on the order of, a total of 44, is that right?

Anthony Vendetti -- Maxim Group -- Analyst

Yeah.

Jeffrey Nugent -- Chairman and Chief Executive Officer

And that -- it's really a question of developing the skills and being able to integrate the approach to bring on new practices and bringing in the practice development manager to build the business in those new accounts once they've made a commitment to buy the unit. So right now, we feel that we've got an adequate number of representatives and that we're looking at on the international side and I think the number is close to 20 to 22. And that I would consider that to be an extremely high functioning team over there.

And again, the result of what Kirk brings to the business, and it's all based on discipline and aggressiveness to be able to convince practices that this is going to make a significant contribution to their overall objectives.

Anthony Vendetti -- Maxim Group -- Analyst

So, lastly, on miraDry, you estimated that 35% to 40% of miraDry patients come back for another procedure of some type. Is that just in internal number that you have? And if so, what's the -- what was the sample size that you tracked to determine that?

Jeffrey Nugent -- Chairman and Chief Executive Officer

Well, it's certainly been part of our market research and pilot program. I don't have an end value that I can give you right now but we are seeing and again, this is relatively new. It's the tail end of fourth quarter going into first quarter. But we're pleased with the feedback that we're getting, that people who come in for miraDry treatment have predominantly not been to an aesthetic practice before, and once again they see the advantages of other aesthetic treatments that are available.

But yes, we're encouraged by that estimate and the further along we get, we may find this to be conservative, we may find it to be a bit aggressive. But it depends on practice by practice, and we could get into a larger discussion on that. But we've worked hard at making this an integrated approach to onboarding, not only onboarding, new practices, but also to take the installed base that we have, that are approximately a thousand installs and to work with them to increase the productivity and the number of procedures per week, per month. So that has the double advantage of increasing the consumables volume, which makes a significant improvement to our overall gross margins.

Consumables have a north of a 70% gross margin, whereas the capital equipment obviously has a lower gross margin.

Anthony Vendetti -- Maxim Group -- Analyst

Okay. Thanks for the color. Appreciate it.

Jeffrey Nugent -- Chairman and Chief Executive Officer

Sure.

Operator

Thank you. This does conclude the question-and-answer session of today's program. I'd like to have the program back to Jeff Nugent for any further remarks.

Jeffrey Nugent -- Chairman and Chief Executive Officer

Well, I just want to thank all of you for your interest and I know that there is a high level of support for the Sientra business opportunity, and that even with some of the headwinds that we faced and I think you're all familiar with most of them, we've lived through it, but we're extremely proud of the progress we've made in getting through those headwinds.

And right now, the primary one we're dealing with is waiting for the FDA panel to conclude, and that we remain optimistic and informed optimism that the results of the FDA panel will actually benefit patients in terms of informed consent. And that we still feel that we have such an advantage with our superior safety data, that that's going to play a significant role in driving market share going forward. So again, I thank you for your interest and I can't say enough about my confidence that we've made the progress that we have and that this is the basis for a significant global business. So again, thank you very much and look to seeing you as many of you as possible in the near future. So thank you.

Operator

Thank you. Ladies and gentlemen, for your participation in today's conference. This does conclude the program. You may now disconnect. Good day.

Duration: 65 minutes

Call participants:

Neil Bhalodkar -- Investor Relations and Business Analytics

Jeffrey Nugent -- Chairman and Chief Executive Officer

Paul Little -- Chief Financial Officer, Senior Vice President and Treasurer

Jonathan Block -- Stifel -- Analyst

Anna Nussbaum -- William Blair -- Analyst

Richard Newitter -- Leerink Partners LLC -- Analyst

Chris Cooley -- Stephens -- Analyst

Charles Huiner -- Chief Operating Officer and Senior Vice President of Corporate Development and Strategy

William Fafinski -- Craig-Hallum Capital Group LLC -- Analyst

Anthony Vendetti -- Maxim Group -- Analyst

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