NASDAQ:TELA TELA Bio Q1 2025 Earnings Report $1.44 -0.01 (-0.69%) Closing price 05/23/2025 04:00 PM EasternExtended Trading$1.44 0.00 (-0.35%) As of 05/23/2025 05:45 PM Eastern Extended trading is trading that happens on electronic markets outside of regular trading hours. This is a fair market value extended hours price provided by Polygon.io. Learn more. ProfileEarnings HistoryForecast TELA Bio EPS ResultsActual EPS-$0.25Consensus EPS -$0.21Beat/MissMissed by -$0.04One Year Ago EPSN/ATELA Bio Revenue ResultsActual Revenue$18.52 millionExpected Revenue$17.35 millionBeat/MissBeat by +$1.17 millionYoY Revenue GrowthN/ATELA Bio Announcement DetailsQuarterQ1 2025Date5/8/2025TimeAfter Market ClosesConference Call DateThursday, May 8, 2025Conference Call Time4:30PM ETUpcoming EarningsTELA Bio's Q2 2025 earnings is scheduled for Monday, August 11, 2025, with a conference call scheduled at 4:30 PM ET. Check back for transcripts, audio, and key financial metrics as they become available.Conference Call ResourcesConference Call AudioConference Call TranscriptPress Release (8-K)Quarterly Report (10-Q)Earnings HistoryCompany ProfilePowered by TELA Bio Q1 2025 Earnings Call TranscriptProvided by QuartrMay 8, 2025 ShareLink copied to clipboard.There are 7 speakers on the call. Operator00:00:00Good afternoon, ladies and gentlemen, and welcome to the TELA Bio First Quarter twenty twenty five Earnings Conference Call. At this time, all participants are in listen only mode. Following the prepared remarks, there will be a question and answer session. Please be advised that today's conference is being recorded. I would now like to turn the conference over to Louisa Smith from Gilmartin Group. Speaker 100:00:22Thank you, Gerald, and good afternoon, everyone. Earlier today, TeleBio released financial results for the first quarter twenty twenty five. A copy of the press release is available on the company's website. Joining me on today's call are Tony Koblisch, President and Chief Executive Officer and Roberto Kuka, Chief Operating Officer and Chief Financial Officer. Before we begin, I'd like to remind you that during this conference call, the company may make projections and forward looking statements regarding future events. Speaker 100:00:54We encourage you to review the company's past and future filings with the SEC, including without limitation, the company's annual report on Form 10 ks and quarterly reports on Forms 10 Q, which identify the specific factors that may cause actual results or events to differ materially from those described in these forward looking statements. These factors may include, without limitation, statements regarding product development and pipeline opportunities, product potential, the impact of various macroeconomic conditions identified in our filings, like changes in surgical procedural volume, the regulatory environment, sales and marketing strategies, capital resources or operating performance. With that, I will now turn the call over to Tony. Speaker 200:01:46Thanks, Louisa, and good afternoon, everyone. Thank you for joining TeleBio's first quarter twenty twenty five earnings call. I'll begin by reviewing the quarter and the factors that drove performance, then I'll turn it over to Roberto for a more detailed review of the financials and our outlook, then share some closing thoughts before opening it up for your questions. We generated $18,500,000 in revenue during the first quarter, representing 12% growth over the prior year and 5% sequential growth over the fourth quarter of 'twenty four. In Q1, we saw strong demand for both OviTex and OviTex PRS reinforced tissue matrix products with revenue for each growing approximately 152% respectively with PRS coming off a particularly strong performance a year ago. Speaker 200:02:34Additionally, we were very pleased with the continued strength in our European business with 17% growth over the first quarter of twenty twenty four, reflecting what we believe to be an exceptionally attractive ex U. S. Opportunity for Tele moving forward. Based on this performance, the strong morale of our commercial organization and our continued confidence in their performance, we are reaffirming our 2025 revenue expectation of 85,000,000 to $88,000,000 representing growth from 23% to 27% over full year 'twenty four. Let me provide some more insight into the continuing improvement and evolution of our commercial organization. Speaker 200:03:13We've seen real effectiveness from our new territory manager or TM and account specialist or AS structure, which has already yielded quality results and shown signs of further potential upside. As of this week, we have 70 territory managers and 22 account specialists across our region, and we plan to further augment these numbers with particular focus on the TM, including by fostering talent from within the organization. Our improved training program gives us confidence that all new reps will be able to hit the ground running and contribute meaningfully within the first quarter or two of hiring. Year to date, we've trained a total of 25 new sales team members comprising 11 PMs and 14 ASs. We have seen very positive results across all of our trainings as we get the new reps into the field and have observed that ASs have shown great enthusiasm in addition to strong product and clinical knowledge based on internal assessment we conduct as part of our enhanced training program. Speaker 200:04:19The new structure with ambitious ASs will allow TM to further expand their networks while simultaneously staying in front of existing accounts and driving sales. Furthermore, in the event that a TM departs the company, an in place AS enables continuity and account coverage, helping ensure customer relationships are maintained and business momentum is preserved. We also continue to see positive dynamics playing out within the broader hernia market with the shift away from plastic mesh and towards more natural repair products. It is to our benefit that the industry is transitioning away from permanent synthetic mesh and we continue to be strongly positioned to capitalize on this shift. OviTex is equipped with strong and consistent clinical data showing the clinical value of this portfolio of products. Speaker 200:05:10And as a result, we continue to gain market traction this quarter. We reached over sixty nine thousand OvaTec hernia implantation since inception and OvaTec IHR and Liquefix has seen great momentum with over $1,000,000 each in sales since the launch of 2024. We remain committed to bringing new and complementary products to market, and we recently announced the launch of two larger sizes of our OviTex PRS product, which has the potential to simplify more complex plastic and reconstructive procedures. Surgeons will no longer need to suture smaller pieces together for use in larger applications, increasing their OR efficiency, reducing cost, and establishing OviTex PRS as a premier repair solution with one of the broadest offerings for surgeon needs. Year to date, we have presented the benefits of our product in front of more than 5,000 surgeons globally with deep engagement of more than 1,500 surgeons through 25 industry and society meeting, two cadaver lab, numerous educational dinners and webinars, a live surgery symposium and two standing room only industry symposia, one in The US and one in Europe. Speaker 200:06:23We also hosted our third annual plastic and reconstructive surgery innovation summit, bringing together leading surgeons to advance techniques in soft tissue reconstruction. Also of note, we participated in the prestigious Intuitive Connect meeting in April, attended by nearly 1,000 surgeons in our space, where we were headlined as one of the three top sponsors and one of only 14 invited industry attendees. We were also the exclusive sponsor of the general surgeon welcome reception for the meeting, an OVATEX IHR test drive on the Da Vinci five workstation with Doctor. Paul Zotek of Indiana Hernia Center, a long time OVATEK user and TeleBio key opinion leader and faculty member. Before I turn the call over to Roberto to review our financials, I'd like to address the current tariff environment and our exposure. Speaker 200:07:17As it stands today, there is a 10% tariff applied to products shipped into The US from New Zealand, which is where the vast majority of our products are manufactured. Based on our long term supply and license agreement, the tariff is shared equally by us and the manufacturer. Because of the relatively modest acquisition prices of our products, we expect that our share of the tariff will negatively affect our gross margin by no more than 50 to 100 basis points. Additionally, we are working with our partner in collaboration to further reduce the tariff impact by shipping products, for example, intended for Europe directly to our distribution facility there rather than via The US as we've done historically. I'll now ask Roberto to view our financials in more detail. Speaker 300:08:05Thanks, Tony. As you mentioned, revenue for the first quarter of twenty twenty five increased 12% year over year to $18,500,000 with revenue from OviTex growing 15% and OviTex PRS revenue growing 2% for the year. This growth was primarily due to an increase in unit sales of our hernia products resulting from the addition of new customers and growing international sales. OvaTec's unit sales grew 29% for the quarter while PRS unit sales declined slightly 3% for the quarter after an unusually strong first quarter in 2024. Stronger ASP for PRS offset this effect to provide incremental PRS revenue growth year over year. Speaker 300:08:46Gross margin was 67.6% for the first quarter compared to 68.3% for the prior year period. The decrease was primarily due to excess and obsolete inventory adjustments as a percentage of revenue, which resulted from the introduction of newer generation products this year. Sales and marketing expense was $16,600,000 in the first quarter compared to $17,500,000 for the prior year period. The decrease was primarily due to lower compensation costs from a decrease in headcount and lower consulting and travel expenses, which were partially offset by higher commission expense on an increased revenue base. General and administrative expenses were $3,800,000 for the first quarter compared to $3,800,000 in the prior year period. Speaker 300:09:32R and D expense for the first quarter was $2,500,000 compared to $2,400,000 in the prior year period. Loss from operations was $10,500,000 in the first quarter of this year compared to $4,800,000 in the prior year period. The difference was largely attributable to the recognized gain of $7,600,000 from the sale of the Nivas product line in the first quarter of twenty twenty four. Net loss was $11,300,000 in the first quarter compared to $5,700,000 in the prior year period similarly affected by the sale of the Nibis product line last year. We ended the first quarter with $42,800,000 in cash and cash equivalents. Speaker 300:10:13We are reiterating our '25 guidance, which anticipates revenues to range from $85,000,000 to $88,000,000 representing growth of 23% to 27% over the full year 2024. We also expect that operating loss and net loss will decrease over the course of the year and will be lower in 2025 than in 2024. We expect that operating efficiency improvements will result in 2025 OpEx being flat compared to 2024. With that, I'll hand the call back to Tony for closing remarks. Speaker 200:10:46And thank you, Roberto. Looking ahead in 2025, we are positioned very well coming off of a strong first quarter. After recalibrating our commercial organization to adjust to market dynamics and position us for success moving forward, we have the momentum to continue meaningful growth. OviTex is a truly differentiated solution and as the world moves away from plastic mesh, Tele is emerging as a leader with a clinically validated portfolio to support that shift. Finally, I'd like to thank all those at the company who contributed to our success this quarter. Speaker 200:11:20Your commitment to increasing utilization of our exceptional product is making positive difference in people's lives around the world. With that, I'll now ask Gerald to open the line for your questions. Please go ahead. Operator00:11:34Thank you. At this time, we will conduct a question and answer session. As a reminder, to ask a question, you will need to press 11 on your telephone Our first question comes from Frank Tatakian from Lake Street Capital Markets. The floor is yours. Speaker 400:12:05Great. Thanks for taking the questions. Congrats on the nice rebound and getting back to double digit growth. I was hoping to ask one first on kind of cadencing of revenue through the back half of the year. Good to see a strong start and good to hear you've got 25 new reps trained year to date. Speaker 400:12:20But what are really the key factors to continuing sequential growth through the end of the year and maybe any color on the cadencing of that revenue would be helpful as well. Speaker 300:12:32So I'll start and then you can jump in. So last year we had a somewhat unusual year with disruptions in the second and fourth quarter. So the historical precedent last year isn't very helpful. But if you look at the three years prior, they all have very similar cadences, which we've talked about with investors in the So we tend to have a bigger step up from the first to the second quarter, a smaller step up from the second to the third quarter affected in large part by the summer holidays in North America and then a bigger step up again from the third to the fourth quarter. And we expect to see that pattern recapitulated this year coming off of, the first quarter that we just had. Speaker 300:13:12What drives that cadencing and the growth from quarter to quarter is just continued traction by our reps. All of the reps' quotas increase quarter to quarter throughout the year. With the introduction of our new AS class, our associate sales reps, their assistance revenue capture, share capture app practices allows the reps to continue focusing on getting new physicians using the products and driving that growth. Speaker 200:13:47Yeah, I mean, I'll add that the AS program, although new, is working quite well in tandem with our territory managers. So I think what you have to think about is if you look at our top 10, top 15 reps that have ASs, their growth is reaccelerating, and they're getting stronger and stronger and stronger. And then the presence of the ASs allows us to deal with what I'll call sort of the natural ins and outs of sales force much more efficiently without scrambling and without losing coverage. So there's a very strong element of offense capability with the combination of these two types of selling entities and also a very strong defensive strategy as well. So overall, it just yields for a more stable environment for us to work through for 2025. Speaker 200:14:42We had to make a lot of adjustments the last couple of years along the way, and we don't plan on doing that this year. So the name of the game at the street level is stability, adding strength and just driving the message like we know that we can. We feel that our products stand up to the test of time. They deliver. And we just got to keep at it. Speaker 200:15:06This is a long process. It's a marathon. It's not a sprint. I know we get measured quarter to quarter, but we feel great. And our commercial team, most importantly, feels great coming out of an exceptional performance in Q1. Speaker 200:15:19And they have a lot of confidence going forward. Speaker 400:15:23That's helpful. Thank you. And then maybe on the competitive hiring front, obviously, that's what impacted the fourth quarter numbers. Any changes in that dynamic? Have you seen any more of the competitive hiring trying to come into your organization? Speaker 400:15:38Or do you feel that's kind of stabilized at this point? Obviously, the AS did insulate some of that, but any color there? Speaker 200:15:45Yeah, I'm going to call it stabilized. I think the real message and description of it is back to a more natural process, right, where the ins and outs are more based on performance and those types of things. Of course, you know, our Salesforce is super strong. They're probably coveted by many of these companies, but I think we've done a great job of bringing morale back and and creating a stable environment. And, you know, I'm just gonna do a little commercial for this company. Speaker 200:16:19This is a fantastic place to work for all of our employees, but especially our commercial employees. Right? So we offer products that are game changing, innovative, backed up, and supported by great clinical data. That is a dream for a commercial organization. The products do what we say they will do. Speaker 200:16:39We have, an exceptional incentive compensation program. The commissions here are best in class. So there is a lot of financial success possible for our commercial organization, which is great for them, their career development, and their families. So the other benefit is not only is all of that superb, but you look at hernia, for example, well over a billion dollar market. And it's a procedure that may be one of the top number of top surgical procedures in the world in terms of performing an incident. Speaker 200:17:13And we have an opportunity to be the catalyst for chains. Right? 80% of the market is still polypropylene mesh, and and it's obvious by the large players that they they are very anxious and interested in shifting away from that technology. Their solution is a resorbable polymer product. Our solution is a reinforced tissue matrix. Speaker 200:17:34So there's only so many solutions in post or minimal polypropylene market. And it's not every day that you have a great opportunity, great products, great company to work with, but also do something that's right for people, for society, for costs, and to change the practice of a very highly performed procedure. The PRS business isn't that much different. It's about a billion dollar market as well. Our products are standing up well. Speaker 200:18:03Our clinical data that is emerging there is exceptional also. And there seems to be a great interest in moving away from cadaver skin in that market. There's a lot of interest in resorbable polymers and RTM products like we have. So to a certain extent, the dynamics in $2,000,000,000 plus markets, are just really excellent, and situated well for us over the long haul. Speaker 400:18:28Got it. That's helpful. I'll stop there. Congrats again and look forward to the rest of you. Thanks. Speaker 200:18:33Thanks, Frank. Operator00:18:35Thank you for your question. Our next question comes from Michael Sarcone of Jefferies. The floor is yours. Speaker 500:18:45Good afternoon, and thanks for taking our questions here. Just to start, maybe some more clarification on the tariff impact on gross margin. You said 50 to 100 basis points. Wondering if you could give us a little more color on when specifically you think that could impact your gross margin this year. And in that context, help us think about gross margin phasing through the year. Speaker 300:19:17Sure. I'll start and Tony can jump in. So the first shipments that would be affected by the new tariff are have just come in the past couple of weeks. So obviously that didn't affect the just closed first quarter. We expect to see some of that starting to affect the second quarter and then product depending on whether that actually goes through our sales process and then product will eventually phase through into the third and fourth quarters as we consume existing inventories. Speaker 300:19:50And you'll start seeing that product appear in our gross margin. So it'll be a gradual shift towards that negative 5% to 1% effect on gross margin over the course of the second and third quarters. As far as the timing of gross margin, we tend not to order as much inventory in the fourth quarter of the year because of the end of your holidays and then stock up a bit more in the first quarter. Because of the charge we have to take for potential obsolescence, that negative impact is greatest in the first quarter and you tend to see that the gross margin improves over the course of the year. So we expect to see that sort of pattern continuing slightly blunted by the effect of the tariffs. Speaker 200:20:41Yeah. The only the only thing I'll add to that is, you know, we have an excellent partnership with the ROA and very collaborative relationship and so far and into the future we are both dedicated to working well together to manage the impact of this. We do have some levers as we discussed in remarks to adjust some things and we'll be taking a look at that as well as we go along through this process and we see how long the last as well. Speaker 500:21:16That's very helpful color. Thank you. Yeah. And Tony, to your point, totally get it that we don't know about the sustainability of the tariffs. But to the extent this doesn't get resolved in the near term, is there a way we should think about the potential impact in 2026? Speaker 500:21:37Is it fair to kind of annualize the impact from 2025 and consider that maybe a worst case scenario? Speaker 300:21:48I think the way to think about it is that somewhere in between the 5,100 basis points is where the negative effect is going to settle out on a going forward stable basis. So once you see the amount that's affected us in the second and third quarters, pushing out that slight discount, into 2026 makes sense. Speaker 500:22:11Got it. Thank you. Speaker 300:22:13Thanks, Mike. Operator00:22:14Thank you for your question. Our next question comes from Caitlin Cronin from Canaccord. The floor is yours. Speaker 600:22:30Hey, guys. It's Mikaela on for Caitlin. Thanks for taking the question. You've noted the bundling situation at GPOs and being capped at 20% of volume share at certain hospitals. Can you just talk about how that's playing out and if you've started working with GPOs to potentially reclassify your products into their own category, maybe to address the gap? Speaker 200:22:51Yeah, so I think what we're doing there is just basic blocking and tackling. We have to get more surgeons using our product in any facility. You can imagine if you've got five or 10 surgeons and you only have one or two using the product, it's harder to justify your position there. So focusing on getting more surgeons in each facility up and running is paramount and critical. You just get harder to lever out. Speaker 200:23:21And again, this enhanced pivot to this TMAS selling situation, I think, works very well for us. Our TM can do what they do best, which is get it set up and move from place to place, and our ASs can stay put and make sure that they're working a broader number of customers potentially in each hospital, and be present if any of those kinds of activities start happening. So again, a little bit of offense and a little bit of defense. You know, I think we've got a sales configuration at this point that that serves us well for managing that better than we have in the past. Speaker 600:24:02That's great. Thank you. Speaker 300:24:06Thanks, Mikayla. Operator00:24:10Thank you for your question. One moment, please. Our next question comes from David Turkaly from Citizens JMP. Go ahead. Speaker 200:24:28Hey, great. Can you guys hear me? Got you, Dave. Thanks. Just looking at the guidance for the year and then how the quarter played out between PRS, Novitex, can you give us like your updated expectations on sort of the growth rate for those two, maybe on an annual basis or how that might shift moving forward? Speaker 300:24:52So PRS, as you know, launched more recently. And so it's earlier in its growth cycle. So we have historically seen it in past years other than when there's been some disruptions growing faster than OviTex. And we expect to continue to see that, although as with all launching products, that growth rate is going to slow a bit. But we do expect to continue to see good growth from both products with a bit more growth from PRS. Speaker 200:25:19Yes. And I'll just remind everyone that PRS has a higher ASP. It's probably more sensitive given that fact to the types of procedures that you see in a particular quarter, whether large sizes or smaller sizes are required. So there's a bunch of moving parts with the PRS business. But overall, as Roberto said, we are very bullish on the prospects for that set of products going forward and we continue to add to the product portfolio. Speaker 200:25:49So right now we have three implant configuration. There's probably a fourth one coming at some point next year. We have in comparison to competitors, the broadest range of products there that can be tuned for different surgeon preferences and different patient needs, whether it's a niche, like supersized pieces, or just different technique variants, whether they be revisions or primaries, etcetera. So I think the scope and capacity of our product portfolio is going to get better and better, which will separate us from competition as well. So you really view this as like kind of a one off. Speaker 200:26:31I know you mentioned a tough comp, that negative three, we shouldn't be thinking that happens again. Speaker 300:26:39Just to reiterate, that was on volume rather than on revenue. Revenue did grow. Speaker 200:26:48Got it. Thanks. Speaker 300:26:50Got it. Operator00:26:52Thank you for your question. This concludes the question and answer session. I would now like to turn it back to Tony Koblisch for CEO for closing remarks. Thank you. Speaker 200:27:02Thank you, Gerald, and thank you to everybody who is on this call. I want to really thank the TeleBio employees. We came out of the gate this year strong with great morale. We had an excellent national sales meeting where we rolled out many of these pivots and adjustments, and it looks like we did a lot of the right things. And I just want to say I'm grateful to their persistence and their patience and the hard work, and I look forward to continuing to execute well. Speaker 200:27:35The remainder is here. At the end of the last call, at the end of Q4, I said we would snap back, and hopefully you're getting a sense that we are in the process of snapping back. So with that, thank you. Have a great evening. I know it's a busy, busy time. Speaker 200:27:50See you next time. Operator00:27:52Thank you. Thank you for your participation in today's conference. This does conclude the program. You may now disconnect.Read morePowered by Key Takeaways During Q1, TELA Bio generated $18.5 million in revenue, up 12% year-over-year and 5% sequentially, with OviTex and OviTex PRS each growing ~15%; Europe sales rose 17% and full-year 2025 revenue guidance of $85 – 88 million (23–27% growth) was reaffirmed. The newly implemented territory manager (70 TMs) and account specialist (22 ASs) structure, backed by an enhanced training program, has boosted commercial effectiveness, improved account coverage and is expected to sustain sequential growth. Market trends show a shift away from permanent synthetic mesh toward natural repair products, where OviTex has over 69 000 implants placed and recent larger OviTex PRS sizes launched to streamline complex procedures and drive surgeon adoption. A 10% US tariff on New Zealand-manufactured products will be shared with the manufacturer and is expected to weigh on gross margin by 50–100 basis points, with mitigation plans including direct shipments to Europe. First-quarter operating loss widened to $10.5 million (net loss $11.3 million) versus prior year largely due to the absence of a one-time gain, ending with $42.8 million in cash; management expects operating loss and OpEx to improve through 2025. AI Generated. May Contain Errors.Conference Call Audio Live Call not available Earnings Conference CallTELA Bio Q1 202500:00 / 00:00Speed:1x1.25x1.5x2x Earnings DocumentsPress Release(8-K)Quarterly report(10-Q) TELA Bio Earnings HeadlinesTELA Bio to Present at the 2025 Jefferies Global Healthcare ConferenceMay 25 at 6:09 AM | msn.comTELA Bio to Participate in the 2025 Jefferies Global Healthcare ConferenceMay 22 at 4:16 PM | globenewswire.comElon just did WHAT!?As you may recall, Biden and the Fed were working on a central bank digital currency, or CBDC. Had they gotten away with it, the Fed and U.S. banks could have seized control of our financial lives forever. But Trump stopped them cold on January 23rd, 2025, when he outlawed CBDCs… Paving the way for Elon Musk's secret master plan.May 25, 2025 | Brownstone Research (Ad)Piper Sandler Sticks to Their Hold Rating for TELA Bio (TELA)May 22 at 4:41 AM | theglobeandmail.comTELA Bio Announces Inducement Grants to New Hires with 4-Year Vesting PlanMay 12, 2025 | msn.comTELA Bio Reports Q1 2025 Growth and Product ExpansionMay 12, 2025 | msn.comSee More TELA Bio Headlines Get Earnings Announcements in your inboxWant to stay updated on the latest earnings announcements and upcoming reports for companies like TELA Bio? Sign up for Earnings360's daily newsletter to receive timely earnings updates on TELA Bio and other key companies, straight to your email. Email Address About TELA BioTELA Bio (NASDAQ:TELA), a commercial-stage medical technology company, focuses on providing soft-tissue reconstruction solutions that optimize clinical outcomes by prioritizing the preservation and restoration of the patient's anatomy. The company provides a portfolio of OviTex Reinforced Tissue Matrix (OviTex) products for hernia repair and abdominal wall reconstruction; and OviTex PRS Reinforced Tissue Matrix products to address the unmet needs in plastic and reconstructive surgery, as well as OviTex for Laparoscopic and Robotic Procedures, a sterile reinforced tissue matrix derived from ovine rumen with polypropylene fiber intended to be used in laparoscopic and robotic-assisted hernia surgical repairs. It markets its products through a single direct sales force, principally in the United States. The company was incorporated in 2012 and is headquartered in Malvern, Pennsylvania.View TELA Bio ProfileRead more More Earnings Resources from MarketBeat Earnings Tools Today's Earnings Tomorrow's Earnings Next Week's Earnings Upcoming Earnings Calls Earnings Newsletter Earnings Call Transcripts Earnings Beats & Misses Corporate Guidance Earnings Screener Earnings By Country U.S. Earnings Reports Canadian Earnings Reports U.K. Earnings Reports Latest Articles Booz Allen Hamilton Earnings: 3 Bullish Signals for BAH StockAdvance Auto Parts Jumps on Surprise Earnings BeatAlibaba's Earnings Just Changed Everything for the StockCisco Stock Eyes New Highs in 2025 on AI, Earnings, UpgradesSymbotic Gets Big Earnings Lift: Is the Stock Investable Again?D-Wave Pushes Back on Short Seller Case With Strong EarningsAppLovin Surges on Earnings: What's Next for This Tech Standout? 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There are 7 speakers on the call. Operator00:00:00Good afternoon, ladies and gentlemen, and welcome to the TELA Bio First Quarter twenty twenty five Earnings Conference Call. At this time, all participants are in listen only mode. Following the prepared remarks, there will be a question and answer session. Please be advised that today's conference is being recorded. I would now like to turn the conference over to Louisa Smith from Gilmartin Group. Speaker 100:00:22Thank you, Gerald, and good afternoon, everyone. Earlier today, TeleBio released financial results for the first quarter twenty twenty five. A copy of the press release is available on the company's website. Joining me on today's call are Tony Koblisch, President and Chief Executive Officer and Roberto Kuka, Chief Operating Officer and Chief Financial Officer. Before we begin, I'd like to remind you that during this conference call, the company may make projections and forward looking statements regarding future events. Speaker 100:00:54We encourage you to review the company's past and future filings with the SEC, including without limitation, the company's annual report on Form 10 ks and quarterly reports on Forms 10 Q, which identify the specific factors that may cause actual results or events to differ materially from those described in these forward looking statements. These factors may include, without limitation, statements regarding product development and pipeline opportunities, product potential, the impact of various macroeconomic conditions identified in our filings, like changes in surgical procedural volume, the regulatory environment, sales and marketing strategies, capital resources or operating performance. With that, I will now turn the call over to Tony. Speaker 200:01:46Thanks, Louisa, and good afternoon, everyone. Thank you for joining TeleBio's first quarter twenty twenty five earnings call. I'll begin by reviewing the quarter and the factors that drove performance, then I'll turn it over to Roberto for a more detailed review of the financials and our outlook, then share some closing thoughts before opening it up for your questions. We generated $18,500,000 in revenue during the first quarter, representing 12% growth over the prior year and 5% sequential growth over the fourth quarter of 'twenty four. In Q1, we saw strong demand for both OviTex and OviTex PRS reinforced tissue matrix products with revenue for each growing approximately 152% respectively with PRS coming off a particularly strong performance a year ago. Speaker 200:02:34Additionally, we were very pleased with the continued strength in our European business with 17% growth over the first quarter of twenty twenty four, reflecting what we believe to be an exceptionally attractive ex U. S. Opportunity for Tele moving forward. Based on this performance, the strong morale of our commercial organization and our continued confidence in their performance, we are reaffirming our 2025 revenue expectation of 85,000,000 to $88,000,000 representing growth from 23% to 27% over full year 'twenty four. Let me provide some more insight into the continuing improvement and evolution of our commercial organization. Speaker 200:03:13We've seen real effectiveness from our new territory manager or TM and account specialist or AS structure, which has already yielded quality results and shown signs of further potential upside. As of this week, we have 70 territory managers and 22 account specialists across our region, and we plan to further augment these numbers with particular focus on the TM, including by fostering talent from within the organization. Our improved training program gives us confidence that all new reps will be able to hit the ground running and contribute meaningfully within the first quarter or two of hiring. Year to date, we've trained a total of 25 new sales team members comprising 11 PMs and 14 ASs. We have seen very positive results across all of our trainings as we get the new reps into the field and have observed that ASs have shown great enthusiasm in addition to strong product and clinical knowledge based on internal assessment we conduct as part of our enhanced training program. Speaker 200:04:19The new structure with ambitious ASs will allow TM to further expand their networks while simultaneously staying in front of existing accounts and driving sales. Furthermore, in the event that a TM departs the company, an in place AS enables continuity and account coverage, helping ensure customer relationships are maintained and business momentum is preserved. We also continue to see positive dynamics playing out within the broader hernia market with the shift away from plastic mesh and towards more natural repair products. It is to our benefit that the industry is transitioning away from permanent synthetic mesh and we continue to be strongly positioned to capitalize on this shift. OviTex is equipped with strong and consistent clinical data showing the clinical value of this portfolio of products. Speaker 200:05:10And as a result, we continue to gain market traction this quarter. We reached over sixty nine thousand OvaTec hernia implantation since inception and OvaTec IHR and Liquefix has seen great momentum with over $1,000,000 each in sales since the launch of 2024. We remain committed to bringing new and complementary products to market, and we recently announced the launch of two larger sizes of our OviTex PRS product, which has the potential to simplify more complex plastic and reconstructive procedures. Surgeons will no longer need to suture smaller pieces together for use in larger applications, increasing their OR efficiency, reducing cost, and establishing OviTex PRS as a premier repair solution with one of the broadest offerings for surgeon needs. Year to date, we have presented the benefits of our product in front of more than 5,000 surgeons globally with deep engagement of more than 1,500 surgeons through 25 industry and society meeting, two cadaver lab, numerous educational dinners and webinars, a live surgery symposium and two standing room only industry symposia, one in The US and one in Europe. Speaker 200:06:23We also hosted our third annual plastic and reconstructive surgery innovation summit, bringing together leading surgeons to advance techniques in soft tissue reconstruction. Also of note, we participated in the prestigious Intuitive Connect meeting in April, attended by nearly 1,000 surgeons in our space, where we were headlined as one of the three top sponsors and one of only 14 invited industry attendees. We were also the exclusive sponsor of the general surgeon welcome reception for the meeting, an OVATEX IHR test drive on the Da Vinci five workstation with Doctor. Paul Zotek of Indiana Hernia Center, a long time OVATEK user and TeleBio key opinion leader and faculty member. Before I turn the call over to Roberto to review our financials, I'd like to address the current tariff environment and our exposure. Speaker 200:07:17As it stands today, there is a 10% tariff applied to products shipped into The US from New Zealand, which is where the vast majority of our products are manufactured. Based on our long term supply and license agreement, the tariff is shared equally by us and the manufacturer. Because of the relatively modest acquisition prices of our products, we expect that our share of the tariff will negatively affect our gross margin by no more than 50 to 100 basis points. Additionally, we are working with our partner in collaboration to further reduce the tariff impact by shipping products, for example, intended for Europe directly to our distribution facility there rather than via The US as we've done historically. I'll now ask Roberto to view our financials in more detail. Speaker 300:08:05Thanks, Tony. As you mentioned, revenue for the first quarter of twenty twenty five increased 12% year over year to $18,500,000 with revenue from OviTex growing 15% and OviTex PRS revenue growing 2% for the year. This growth was primarily due to an increase in unit sales of our hernia products resulting from the addition of new customers and growing international sales. OvaTec's unit sales grew 29% for the quarter while PRS unit sales declined slightly 3% for the quarter after an unusually strong first quarter in 2024. Stronger ASP for PRS offset this effect to provide incremental PRS revenue growth year over year. Speaker 300:08:46Gross margin was 67.6% for the first quarter compared to 68.3% for the prior year period. The decrease was primarily due to excess and obsolete inventory adjustments as a percentage of revenue, which resulted from the introduction of newer generation products this year. Sales and marketing expense was $16,600,000 in the first quarter compared to $17,500,000 for the prior year period. The decrease was primarily due to lower compensation costs from a decrease in headcount and lower consulting and travel expenses, which were partially offset by higher commission expense on an increased revenue base. General and administrative expenses were $3,800,000 for the first quarter compared to $3,800,000 in the prior year period. Speaker 300:09:32R and D expense for the first quarter was $2,500,000 compared to $2,400,000 in the prior year period. Loss from operations was $10,500,000 in the first quarter of this year compared to $4,800,000 in the prior year period. The difference was largely attributable to the recognized gain of $7,600,000 from the sale of the Nivas product line in the first quarter of twenty twenty four. Net loss was $11,300,000 in the first quarter compared to $5,700,000 in the prior year period similarly affected by the sale of the Nibis product line last year. We ended the first quarter with $42,800,000 in cash and cash equivalents. Speaker 300:10:13We are reiterating our '25 guidance, which anticipates revenues to range from $85,000,000 to $88,000,000 representing growth of 23% to 27% over the full year 2024. We also expect that operating loss and net loss will decrease over the course of the year and will be lower in 2025 than in 2024. We expect that operating efficiency improvements will result in 2025 OpEx being flat compared to 2024. With that, I'll hand the call back to Tony for closing remarks. Speaker 200:10:46And thank you, Roberto. Looking ahead in 2025, we are positioned very well coming off of a strong first quarter. After recalibrating our commercial organization to adjust to market dynamics and position us for success moving forward, we have the momentum to continue meaningful growth. OviTex is a truly differentiated solution and as the world moves away from plastic mesh, Tele is emerging as a leader with a clinically validated portfolio to support that shift. Finally, I'd like to thank all those at the company who contributed to our success this quarter. Speaker 200:11:20Your commitment to increasing utilization of our exceptional product is making positive difference in people's lives around the world. With that, I'll now ask Gerald to open the line for your questions. Please go ahead. Operator00:11:34Thank you. At this time, we will conduct a question and answer session. As a reminder, to ask a question, you will need to press 11 on your telephone Our first question comes from Frank Tatakian from Lake Street Capital Markets. The floor is yours. Speaker 400:12:05Great. Thanks for taking the questions. Congrats on the nice rebound and getting back to double digit growth. I was hoping to ask one first on kind of cadencing of revenue through the back half of the year. Good to see a strong start and good to hear you've got 25 new reps trained year to date. Speaker 400:12:20But what are really the key factors to continuing sequential growth through the end of the year and maybe any color on the cadencing of that revenue would be helpful as well. Speaker 300:12:32So I'll start and then you can jump in. So last year we had a somewhat unusual year with disruptions in the second and fourth quarter. So the historical precedent last year isn't very helpful. But if you look at the three years prior, they all have very similar cadences, which we've talked about with investors in the So we tend to have a bigger step up from the first to the second quarter, a smaller step up from the second to the third quarter affected in large part by the summer holidays in North America and then a bigger step up again from the third to the fourth quarter. And we expect to see that pattern recapitulated this year coming off of, the first quarter that we just had. Speaker 300:13:12What drives that cadencing and the growth from quarter to quarter is just continued traction by our reps. All of the reps' quotas increase quarter to quarter throughout the year. With the introduction of our new AS class, our associate sales reps, their assistance revenue capture, share capture app practices allows the reps to continue focusing on getting new physicians using the products and driving that growth. Speaker 200:13:47Yeah, I mean, I'll add that the AS program, although new, is working quite well in tandem with our territory managers. So I think what you have to think about is if you look at our top 10, top 15 reps that have ASs, their growth is reaccelerating, and they're getting stronger and stronger and stronger. And then the presence of the ASs allows us to deal with what I'll call sort of the natural ins and outs of sales force much more efficiently without scrambling and without losing coverage. So there's a very strong element of offense capability with the combination of these two types of selling entities and also a very strong defensive strategy as well. So overall, it just yields for a more stable environment for us to work through for 2025. Speaker 200:14:42We had to make a lot of adjustments the last couple of years along the way, and we don't plan on doing that this year. So the name of the game at the street level is stability, adding strength and just driving the message like we know that we can. We feel that our products stand up to the test of time. They deliver. And we just got to keep at it. Speaker 200:15:06This is a long process. It's a marathon. It's not a sprint. I know we get measured quarter to quarter, but we feel great. And our commercial team, most importantly, feels great coming out of an exceptional performance in Q1. Speaker 200:15:19And they have a lot of confidence going forward. Speaker 400:15:23That's helpful. Thank you. And then maybe on the competitive hiring front, obviously, that's what impacted the fourth quarter numbers. Any changes in that dynamic? Have you seen any more of the competitive hiring trying to come into your organization? Speaker 400:15:38Or do you feel that's kind of stabilized at this point? Obviously, the AS did insulate some of that, but any color there? Speaker 200:15:45Yeah, I'm going to call it stabilized. I think the real message and description of it is back to a more natural process, right, where the ins and outs are more based on performance and those types of things. Of course, you know, our Salesforce is super strong. They're probably coveted by many of these companies, but I think we've done a great job of bringing morale back and and creating a stable environment. And, you know, I'm just gonna do a little commercial for this company. Speaker 200:16:19This is a fantastic place to work for all of our employees, but especially our commercial employees. Right? So we offer products that are game changing, innovative, backed up, and supported by great clinical data. That is a dream for a commercial organization. The products do what we say they will do. Speaker 200:16:39We have, an exceptional incentive compensation program. The commissions here are best in class. So there is a lot of financial success possible for our commercial organization, which is great for them, their career development, and their families. So the other benefit is not only is all of that superb, but you look at hernia, for example, well over a billion dollar market. And it's a procedure that may be one of the top number of top surgical procedures in the world in terms of performing an incident. Speaker 200:17:13And we have an opportunity to be the catalyst for chains. Right? 80% of the market is still polypropylene mesh, and and it's obvious by the large players that they they are very anxious and interested in shifting away from that technology. Their solution is a resorbable polymer product. Our solution is a reinforced tissue matrix. Speaker 200:17:34So there's only so many solutions in post or minimal polypropylene market. And it's not every day that you have a great opportunity, great products, great company to work with, but also do something that's right for people, for society, for costs, and to change the practice of a very highly performed procedure. The PRS business isn't that much different. It's about a billion dollar market as well. Our products are standing up well. Speaker 200:18:03Our clinical data that is emerging there is exceptional also. And there seems to be a great interest in moving away from cadaver skin in that market. There's a lot of interest in resorbable polymers and RTM products like we have. So to a certain extent, the dynamics in $2,000,000,000 plus markets, are just really excellent, and situated well for us over the long haul. Speaker 400:18:28Got it. That's helpful. I'll stop there. Congrats again and look forward to the rest of you. Thanks. Speaker 200:18:33Thanks, Frank. Operator00:18:35Thank you for your question. Our next question comes from Michael Sarcone of Jefferies. The floor is yours. Speaker 500:18:45Good afternoon, and thanks for taking our questions here. Just to start, maybe some more clarification on the tariff impact on gross margin. You said 50 to 100 basis points. Wondering if you could give us a little more color on when specifically you think that could impact your gross margin this year. And in that context, help us think about gross margin phasing through the year. Speaker 300:19:17Sure. I'll start and Tony can jump in. So the first shipments that would be affected by the new tariff are have just come in the past couple of weeks. So obviously that didn't affect the just closed first quarter. We expect to see some of that starting to affect the second quarter and then product depending on whether that actually goes through our sales process and then product will eventually phase through into the third and fourth quarters as we consume existing inventories. Speaker 300:19:50And you'll start seeing that product appear in our gross margin. So it'll be a gradual shift towards that negative 5% to 1% effect on gross margin over the course of the second and third quarters. As far as the timing of gross margin, we tend not to order as much inventory in the fourth quarter of the year because of the end of your holidays and then stock up a bit more in the first quarter. Because of the charge we have to take for potential obsolescence, that negative impact is greatest in the first quarter and you tend to see that the gross margin improves over the course of the year. So we expect to see that sort of pattern continuing slightly blunted by the effect of the tariffs. Speaker 200:20:41Yeah. The only the only thing I'll add to that is, you know, we have an excellent partnership with the ROA and very collaborative relationship and so far and into the future we are both dedicated to working well together to manage the impact of this. We do have some levers as we discussed in remarks to adjust some things and we'll be taking a look at that as well as we go along through this process and we see how long the last as well. Speaker 500:21:16That's very helpful color. Thank you. Yeah. And Tony, to your point, totally get it that we don't know about the sustainability of the tariffs. But to the extent this doesn't get resolved in the near term, is there a way we should think about the potential impact in 2026? Speaker 500:21:37Is it fair to kind of annualize the impact from 2025 and consider that maybe a worst case scenario? Speaker 300:21:48I think the way to think about it is that somewhere in between the 5,100 basis points is where the negative effect is going to settle out on a going forward stable basis. So once you see the amount that's affected us in the second and third quarters, pushing out that slight discount, into 2026 makes sense. Speaker 500:22:11Got it. Thank you. Speaker 300:22:13Thanks, Mike. Operator00:22:14Thank you for your question. Our next question comes from Caitlin Cronin from Canaccord. The floor is yours. Speaker 600:22:30Hey, guys. It's Mikaela on for Caitlin. Thanks for taking the question. You've noted the bundling situation at GPOs and being capped at 20% of volume share at certain hospitals. Can you just talk about how that's playing out and if you've started working with GPOs to potentially reclassify your products into their own category, maybe to address the gap? Speaker 200:22:51Yeah, so I think what we're doing there is just basic blocking and tackling. We have to get more surgeons using our product in any facility. You can imagine if you've got five or 10 surgeons and you only have one or two using the product, it's harder to justify your position there. So focusing on getting more surgeons in each facility up and running is paramount and critical. You just get harder to lever out. Speaker 200:23:21And again, this enhanced pivot to this TMAS selling situation, I think, works very well for us. Our TM can do what they do best, which is get it set up and move from place to place, and our ASs can stay put and make sure that they're working a broader number of customers potentially in each hospital, and be present if any of those kinds of activities start happening. So again, a little bit of offense and a little bit of defense. You know, I think we've got a sales configuration at this point that that serves us well for managing that better than we have in the past. Speaker 600:24:02That's great. Thank you. Speaker 300:24:06Thanks, Mikayla. Operator00:24:10Thank you for your question. One moment, please. Our next question comes from David Turkaly from Citizens JMP. Go ahead. Speaker 200:24:28Hey, great. Can you guys hear me? Got you, Dave. Thanks. Just looking at the guidance for the year and then how the quarter played out between PRS, Novitex, can you give us like your updated expectations on sort of the growth rate for those two, maybe on an annual basis or how that might shift moving forward? Speaker 300:24:52So PRS, as you know, launched more recently. And so it's earlier in its growth cycle. So we have historically seen it in past years other than when there's been some disruptions growing faster than OviTex. And we expect to continue to see that, although as with all launching products, that growth rate is going to slow a bit. But we do expect to continue to see good growth from both products with a bit more growth from PRS. Speaker 200:25:19Yes. And I'll just remind everyone that PRS has a higher ASP. It's probably more sensitive given that fact to the types of procedures that you see in a particular quarter, whether large sizes or smaller sizes are required. So there's a bunch of moving parts with the PRS business. But overall, as Roberto said, we are very bullish on the prospects for that set of products going forward and we continue to add to the product portfolio. Speaker 200:25:49So right now we have three implant configuration. There's probably a fourth one coming at some point next year. We have in comparison to competitors, the broadest range of products there that can be tuned for different surgeon preferences and different patient needs, whether it's a niche, like supersized pieces, or just different technique variants, whether they be revisions or primaries, etcetera. So I think the scope and capacity of our product portfolio is going to get better and better, which will separate us from competition as well. So you really view this as like kind of a one off. Speaker 200:26:31I know you mentioned a tough comp, that negative three, we shouldn't be thinking that happens again. Speaker 300:26:39Just to reiterate, that was on volume rather than on revenue. Revenue did grow. Speaker 200:26:48Got it. Thanks. Speaker 300:26:50Got it. Operator00:26:52Thank you for your question. This concludes the question and answer session. I would now like to turn it back to Tony Koblisch for CEO for closing remarks. Thank you. Speaker 200:27:02Thank you, Gerald, and thank you to everybody who is on this call. I want to really thank the TeleBio employees. We came out of the gate this year strong with great morale. We had an excellent national sales meeting where we rolled out many of these pivots and adjustments, and it looks like we did a lot of the right things. And I just want to say I'm grateful to their persistence and their patience and the hard work, and I look forward to continuing to execute well. Speaker 200:27:35The remainder is here. At the end of the last call, at the end of Q4, I said we would snap back, and hopefully you're getting a sense that we are in the process of snapping back. So with that, thank you. Have a great evening. I know it's a busy, busy time. Speaker 200:27:50See you next time. Operator00:27:52Thank you. Thank you for your participation in today's conference. This does conclude the program. You may now disconnect.Read morePowered by