On October 19, 2022, market analyst Hindenburg Research published a report entitled “Establishment Labs: A Financially Stretched Silicone Safety Charade” which alleged, among other things, that “[d]espite claims of superior safety, we found that almost all key safety studies touted by the company have conflicts of interest, with many undisclosed or under-disclosed.” Further, the report alleged that “Establishment claims to have successfully piloted a ‘revolutionary’ technique to place implants through the armpit using local anesthesia (instead of general), claiming the technique will greatly expand its Total Addressable Market (TAM). This type of insertion has been reported since the 1970s and has been widely available for almost 20 years. It has failed to gain traction due to safety risks.”

The report also alleged that “[b]eyond undisclosed safety questions, we have also identified financial risks. Import/export records show that Establishment ships product to entities formerly owned by the CEO and his family, raising questions of conflicts of interest.”

On this news, Establishment Labs’ stock price fell $5.22, or 9%, to close at $51.13 per share on October 19, 2022.