TELA - Earnings call transcript Q4 2023

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Operator

Good afternoon, ladies and gentlemen, and welcome to the TELA Bio Fourth Quarter 2023 Earnings Conference Call. [Operator Instructions] As a reminder, this conference call is being recorded. I would now like to turn the conference over to Louisa Smith from the Gilmore (sic) [ Gilmartin ] Group.

Louisa Smith

Thank you, Michelle, and good afternoon, everyone. Earlier today, TELA Bio released financial results for the fourth quarter and full year 2023. press available the website. the of copy release on is company's A

and me Tony Roberto Officer; Officer are today's Cuca, Financial President Operating Joining call Executive Koblish, on and Chief Chief Chief Officer. and

call, events. SEC Form like differ XX-K without and which limitation, I'd future company's actual and you annual this make begin, company's we you specific the quarterly that identify regarding to these XX-Q, including, to those may on factors report future Before on the company statements past the in encourage and that filings remind results reports during with conference We forward-looking the projections Form statements. or materially the may described forward-looking cause events from to review

statements product's resources strategies, pipeline limitation, pressures, macroeconomic and I'll Tony. now development These the COVID-XX turn of of various instability environment, include, regarding potential, marketing performance. including impact recessionary sales factors call opportunities, capital to lingering effects With over pandemic, inflationary the that, or regulatory conditions, operating the without and the banking product concerns, may and

Antony Koblish

Good afternoon, Louisa. Call. and joining Earnings thanks Year and TELA's Fourth you, Thank Quarter us today Full XXXX for for everyone,

to the foundation year cover topics, Today, I'd performance quarter even did and in in main like greater we just how how for we've X the and completed laid XXXX.

as we Our fourth history, quarter hear been will never have that positioned delighted strong, better success and report was our you very today. to for in I'm

with momentum our guidance. As a outstanding in reflected result which is entered of we considerable our QX, XXXX

-- XX% OviTex PRS is line recently we that growth continue XX%. with over X/X the In year-over-year and year-over-year of given approximately I'll expect the quarter, of sequentially at products, quarter to third $XX And XX% XX% PRS and quarters those from the note PRS the rate for XX% total growth revenues of revenue now revenue. top we've our consecutive launched XXXX. sold XX% pieces than was combined. is XX XX% OviTex had quarter hernia Fourth fourth X,XXX line. accounts average quarter grew more we XXth and the least pattern the an over million, product of PRS that this for this up versus more fourth quarter

November, When spoke to initiatives we described to several last the we some you third increase in quarter. have disruption we productivity launched we in experienced after sales

Specifically, out reps, well all who of short our quota we reps for continuous surpass falling are those more training it. be programs track intensive programs at updated who incentive as on as OviTex and rolled on for to new targeted those PRS training reps, appear to

balanced the product of targeting are We training and across believe target us quarter, adding record going these a over-quota programs while lines. we new are revenues achieve incentive to in continue fourth helped programs, part the what incentive our so selling

As product. one hernia the PRS the Leveraging incentivizing we've tend those It succeed that the plus or comes more sell who in to this. than to that other products one you as described past, only and to in accounts buy twice buy accounts That both more valuable as one is, we've our providing something doesn't like X. PRS products, or we new to doing start compensation going are equal both X. greater to to training X launched, be reps

in a and XXXX We growth expect contributor revenue be this initiative to to beyond. real

with reps year with. of full last that is essentially the complement we are the One difference big in year expect year to end the we beginning XXXX from

X of XX XX of the last reps we we XX that year field reps and exited a 'XX. expanding reps. to sales at to XXXX goal force was assistant to beyond, end to reps Our from and And achieved grow XX with,

a at these the over few had the reps. opportunistically likely We perhaps As some adding of the reps plan with we X and throughout reps year. of February, remain XX course of full the end to converting assistant XXXX, assistants of to levels

in that our is more, more is own with X our from their reps for the likely to remains than not means And a which this productivity point or covering costs. rep XX% What have average sales the to count where of a been perspective, variability variable for rep are in months reach us breakeven negatively XXXX. or the affect they

impact. continue prior We in turnover a years rates expected in expect we lower see than to little and at XXXX, with although will negative

efforts, the for cornerstone and recruiting additional the with more but these training reps focus training have to year not supplemented PlaybookXX productivity on on described the Our then of remains improving the the intensive board. is we on earlier.

Open you I am of Hernia from offerings [ U.S. (sic) Mesh out ]. Systems partner, LIQUIFIX Devices. meeting, today, commercial our products launch to product announced force X the Precision Solutions formal X sales LIQUIFIX full have Fixation licensed for and sales our significant are we we from actually Medical rolled new Earlier exclusively Advanced today the national to where LIQUIFIX promote. Laparoscopic speaking our FIXX These have we

reducing approximation and open about only the and products mechanical The hernia We're trauma. while LIQUIFIX first and liquid is of really LIQUIFIX years. hernia sutures inguinal tacks, and mesh the femoral indicated for the femoral minimally more are for designed minimize than X repairs. products because PMA approximate opportunity The the with in Both second markets of and use that to of to affixes it peritoneum, for FDA-approved been the X is U.S. intrusive tissue the to excited inguinal anchors, available European have the invasive repairs or successful risk tissue indicated is mechanical staples. product bring for

of increases we pain, offering in or vascular other expands methods commitment repair. often products our and surgical and nerve regions of triangle drives our result awareness, a inguinal share all portfolio for the just improving across will demonstrates We growth, mesh as do pain. create in enabling that aspects hernia entire where of fixation to could LIQUIFIX that cause for repair franchise, to the by As doom areas by market injuries such groin utility greater mesh to believe in said, hernia want hernia and chronic we've fixation triangle the penetrating sensitive

to also our repair specifically We designed hernia OviTex inguinal product, repair tissue repair. inguinal a for IHR, platform our introduced OviTex next-generation hernia new soft reps

configurations, and OviTex X response, designed of will which and laparoscopic Just to like optimize rumen utilizes layers with facilitate strength. of just tissue all devices, uniquely hernia for robotic IHR OviTex OviTex shaped OviTex enough sheep other our inguinal healing And via one specifically be designed suture natural reinforced course, of anatomically rectangular, approaches. in strength. repair and available remodeling X are patient's devices added all IHR are leverage the for polymer

products the to and OviTex, invasive first this robotics year for TELA of minimally the future repair. of surgery as steps taking committed hernia remains many the recognition advance with minimally and our invasive choice we're to

XXXX. expect quarter We formally to OviTex the in launch of in second IHR the U.S.

of to as $X codeveloped wound announcement Collagen specifications we with Biosciences. sale the NIVIS designed NIVIS and total to acquirer. better expect the and wound for perform yesterday of care rights to consideration I to product represents cash Regenity on also even our TELA's Pack, high-quality to its of our million an of healing $XX it wanted million portfolio in a Fibrillar elaborate our distribution part innovative, product,

million form upfront. $X of based in totaling we consideration, of the between retain future $X $X over in sales we on that to payments, it interest an And additional seeing net million received NIVIS of Roberto the review million part the the contribution next this from our and to call As now puts to X to more and on divestiture position us our outlook. path years. The over solid turn financial strengthens even cash I'll an results XXXX financial succeeds profitability.

Roberto Cuca

Thanks, Tony.

earlier, commercial increase OviTex sales. mentioned to revenue the PRS an XX% sales of in increases quarter of These as in continued organization. $XX.X growing primarily year. and penetration to increased unit and the $XX XX% expansion and our international to with of OviTex million, Each XXXX XX% existing these increased million XX% for addition products for and were our accounts of resulted growth well as due new customers Tony our of in the As the customer of year-over-year fourth for growing grew the year

for slight that increase quarter the in fourth for primarily incurred period. was due to XXXX quarter our was full compared quarter XX% fourth versus inventory prior XXXX and excess for during of margin the the in and fourth decrease to an Gross XX% and of the year The respectively. adjustments the XX% XX% year, periods, obsolete

full year, of improved amortization margin driven the by intangible assets. was For gross and the processes improvement inventory lower management

headcount. increased the This fourth $XX.X the benefit expenses, same of period a costs higher additional Sales and travel of and our XXXX. due mainly due costs $XX.X organization, and increase marketing consulting higher in million million to in expansion employee-related expense result of commercial in compared was XXXX the to quarter as salary, and was commission to

we As level sales for in the The size once of of over XXXX. Tony expect the the to end achieve mentioned that at earlier, But we fourth expense expect for to rest be quarter the quarter XXXX. marketing was relatively we sales and normalizes effect hired steady-state the of XXXX. expense XXXX XXXX, of first to increase force

XXXX. XXXX expense was $XX.X fourth million of million compared operations million quarter to R&D in fourth to compared expense Loss was and the of $X.X in loss in Net fourth million $XX.X $X.X to the million General same the the was in million both same period. the compared in quarter period year the XXXX $X.X million and $XX administrative in quarters period prior was of XXXX. $X.X in in XXXX XXXX. from

does TELA's than $XX.X with value the NIVIS million cash of Note for to XXXX, in of the cash inventory the of revenue. quarter consideration the year. or NIVIS that million we $XX of total This less XXXX rights both not the of sold which accounted and first million distribution in $XXX,XXX equivalents. NIVIS as in for $X any of part sale of ended We occurred transaction, this include

be of million XXXX. outlook representing XX% range to of the the over million, to year growth full in anticipate XXXX. revenues to $XX the XX% to of for Turning We $XX

in have we from in in be operating excluding even and of As than contribution loss the to loss the we less XXXX divestiture NIVIS. XXXX, said expect net the past,

of to notwithstanding over the divestiture year. the and expect typical over some the the course directionally revenue loss of NIVIS. seasonality since should expect net even reasonably the sequentially, steady operating loss from both year, be we contribution we excluding Moreover, Again, the of to and course decline And operating expense. expenses grow

said $X have we in fund divestiture past, $XX are the million cash incremental cash to of equivalents, from additional proceeds and before our even only to And to that believe provide us to the this. profitability. cushion sufficient we million the NIVIS, As the will

have that, closing for Tony I'll remarks. look forward over the ahead of year it. you exciting of back hand an course and to updating call to We us, With I the

Antony Koblish

than XXXX. We you, I'm Thanks, exceptional expanding proud more products. society and Bio. introduce mesh the educational tissue than more to portfolio, in at XX,XXX what OviTex Bio everyone, and portfolio team specialized in program progress X,XXX and resources and meetings optimizing safe in in the TELA and made other OviTex globally TELA plastic interest Throughout hernia and educated the dedicated clinical and Roberto, PRS brand to labs XXXX, our our surgeons thank on industry through we effective and for use accomplished around preservation. reconstructive outcomes and of our we product of our XX offerings surgeons awareness and soft efficacy of your

procedures on the the OviTex continue of compatibility XXXX, of cases. invasive a TELA's emphasis robotic products biologic robotically educating the In minimally our with One and is market particular to in laparoscopically. hernia with differentiators plan of use reinforced we key performed

I'll to the to our deliver execution. another that Connect upcoming solid part meeting in part like and work we team and Intuitive such to for all questions. Michelle their open next line in As success strong setting at I performance TELA would excited TELA now us for be initiative, year to continued Surgical With closing, for thank is for are that, 'XX. month. In your those a of the up part making financial ask poised XXXX of of outstanding

Operator

Frank is Markets. come of Takkinen Lake the going to from [Operator Instructions] Street line first Our Capital with question

Frank Takkinen

start we're XXXX -- to Obviously, or that. one tech that. achieve of guided guidance. end Congrats revenues with range about good strong and way the XXXX? then start the seasonality to through med on I the a How Obviously, to ramp finish you we typical portion to of a throughout QX? supports strong on year. hoping strong should a the had be year, really thinking the And the was a

Roberto Cuca

question, the Frank. for Sure. Thanks

So we to we've XXXX. seen expect previous that is the seasonality in in likely replicate that years

the make patients -- year. We've the in factors incremental the one co-pays So reps the first then a fourth quarter they use from flat into from at the quarter the about being patients is if Those have schedule physicians One of and drive that means home of surgeries the that to step-up fourth of them. the succeeding to the quarter for typically larger things. from the patients have are their typically will around numbers they for the quarter of couple with then year. surgeries. that end look the pulling and second fourth very quarter And down-ish to like past. are that, of lot holidays, a year so essentially some trying grow understand end strong of quarter both We first from of family the the after is quarter some to at quarters slightly some in are HSAs sales the the revenue the the and first that the talked first the steps preceding then

So -- the at bit of the that produces end a year. pushes push a of typically

leveling that sales do expect, of we So notwithstanding of to sort off seasonality persist. the our force,

Antony Koblish

the time And up setting of suggested. just add force and getting the than seasonality I'll Roberto step-up great to us which to the QX that that what size really by the is much But us. additional for beyond, I sales desired a a building don't for Roberto QX QX them, behave normal tenure think little to differently on in maturity and out color, going Frank, said. generally patterns and is we're and bit

the behind bit little a that's So thinking.

Frank Takkinen

then topic just just A hop assuming, helpful. I'm volume in the market. that robotic about should and of going we after in queue. around And recap it's and tailwind specifically, ask IHR more how be opportunity IHR. the area throughout positioning excitement I'll that thinking kind maybe yourself inguinal, That's Maybe robotic the of forward? conversation correctly volumes a of then as and about Clearly, back the as one of lot whole in that the there, the and inguinal Okay. going inguinal there space. that lot and year well

Antony Koblish

Frank. Sure,

X, period make about in to a to but sure years and and in So pricing X bit space. very experience it's scheme got to it of But optimized, baked technique that product little our we've time design was of the learn a not portfolio inguinal design, ideal work. we

trocars product surgeon unique test to had bed. We us were off developed started templates. down the could the intuitive various from trace there. we that We but it and gave more is it techniques ventral out space. great with techniques The get applicable then So to a basic shapes. we And portfolio various rolling the some success, using the

the misaligned. bit a little is So pricing

program We've a we've take pattern, that polymer. what to the right think able tri-axial ideal. a and from it into been bit just is the little the a is We've thinner. which pattern product. product all to So do template added learning from I gone made bake We've more grid-shaped

strength, is products. And similar a that all bit we're been We've and to I we're little a able learnings, given thinner. For to for the super adjusting strength finally, the stickiness a little taking competitive for market. superb other the will segment maintain of and body deployment, the maybe inside of in technique premium price the products set to inguinal this call those what product be

at the QX. or have roll in And at force in so sales shelf to out the product on it this taken this script, sales And April the we've meeting some after to the to expect years. we'll all point today. our mentioned as we with to we're the this place sales really team learning -- this our national that's And over expose company pleased product

getting start launch. we're on the great head a So

Operator

Caitlin the Genuity. line Canaccord of is going with Cronin to question next come from Our

Caitlin Cronin

awesome Congrats on quarter. an

can you existing contracts Just on we touch to start, and were ramping how in your GPO contracts?

Antony Koblish

which You Caitlin. a sitting hotel landline, were is We're little room a technology. now blurry in there, with ancient a

you if that, could So would just that great. be repeat

Caitlin Cronin

your worries. just No yes. existing Sure, contracting the contracts. GPO ramping was in you're how It and on

Antony Koblish

Yes. you. Thank

within revenue XX% at GPO about partners. we're So our

HealthTrust for longest-tenured particularly very, think you HCA, this that and as we And We look known about within share year organization that's GPO, hernia. the XX%. within subset be very attainable. if a of to may Our to XX% HealthTrust, market XX% the around target at have is

clinical over time, slowly that the of into long So maturity addition haul. pressure, of that penetrate I structure we're proving team, the think we can our and data, given commercial GPOs

the we've Obviously, but to HCA had longest start and with HealthTrust, continue GPOs. through we be that able march should other the

also, LIQUIFIX get product. that are to We this And GPOs to are going then year. other of in for contracting contract be up working to the coming through for process late access

footprint also focusing this involved the and we So getting have, more within further in contracts. mostly on year in keep eye on we processes to implementation growth addition our the

very of contracts grow, not penetration only confident well. grow but we're will that So as our the will number

Caitlin Cronin

is indication just mesh, your Awesome. polypropylene ovine-based indication current and the And for since be on with you will then polyester LIQUIFIX, an for pursuing mesh? use

Antony Koblish

Absolutely. Yes. print reading Very, fine on good that one. Thank Yes. very you. the

it's what's is LIQUIFIX inguinal the today. meshes is hyper-aligned to with of product used polyester. majority start. to say, and powerful very vast And a going the that with it polypropylene used is inguinal is that That be much So to about

our our really. who to us going give our it's not platform products point today, new to going interact and use us ability entry a -- to with it's and new whole to tremendous surgeons give our IHR So portfolio, hernia the present do portfolio

in cetera, the next And think of year very will and LIQUIFIX through to excellent think to the I et well. start itself contributor year. starts this an play for then going as business into forward goes franchise it's driver the I so come a to become year, hernia be important And contracting, as this as

with the on, phase, partner the we far been AMS things of to in launch have couple a much us been participating of surgeons rollout expanding cases Wilson, biologic and very who've It's products. into. hernia, with it. one years. procedures Europe, is the a hundreds our thousands in LIQUIFIX happen to has is the In LIQUIFIX so of tap done ventral national for indication a hundreds things working our There's have curve with there's to for has eye and product with to that that our all combination and good indication One the So of several tips sales There's U.K., here in of biologic like including products, X that meeting. tremendous paper, at pearls us expanding are products. used published learning done of out a very of and Mr.

that know the inguinals it said, we the enough expansion us most to of So synthetic there's great more products. now to different with opener just we works. the work it's LIQUIFIX repaired to door do than We mesh, work with with, have that have a since well. as That label and indications drive and are for

Operator

of line Our Jefferies. question to next the come going Sarcone with Michael is from

Michael Sarcone

X. you time? kind on could Or split versus ultimately color wondering any that one Just excuse I X, incentive could into I programs, be when X? the of more the rep sales there today than if on not what where a go over it give X accounts. more of one us proportion how synergies, one you force the selling to a and product is just selling one think of can the talked sales -- kind multiple force noise, And are is said with you was background sales get about little can product you plus

Roberto Cuca

Mike. the for question, Thanks

what close balanced much all are with trying we're program, the represent each our selling today of sales reps What say X/X pretty of I'd are sales those about who our selling achieve selling, So that some of the to incentive to probably is force. product.

one closer, dynamic can sales something plus believe we X the the the the X/X of move will that, we force that of to benefit So portfolio. other X equaling if to one whole

more a X But selling, not will will to to or similar putting going X% selling, them breakdown to more let's we're the look in products from to PRS So grow require that portfolio. that incentives incentivize in balanced plan place we're grow much put to them, something that gradually X% XX-XX across to the our them jump hernia immediately. between say,

Michael Sarcone

helpful. me, question through to then cash you about burn. trend expect the how it. Thank year? Got on That's second just you. you cash And for just Can talk

Roberto Cuca

actually, year in seeing Well, OpEx increasing net and and operating year. loss the that reasonably the and of level way directionally course loss be revenue, the course of the over decrease operating same should we over with the income --

how of We expect building the spent directionally, to decreasing example. same doing bit burn cash somewhat is But of decrease burn for incentive cash be to should loss. thing. is income a There little our and similarly be in the payment cash inventory seasonality compensation, of or operating in with

Operator

Securities. the is question from going with JMP Turkaly next to line of Our Dave come

David Turkaly

give You an you mentioned curious, able are as think you for the And go accounts accounts on where a now? to that's of if those you how in I'm using both valuable. have us XXXX? are many maybe twice have update just to you target going

Roberto Cuca

the were What about? kind breaking at were accounts you of you beginning. Sorry, up asking

David Turkaly

valuable. And Essentially, are could today? twice mentioned, both if an how how of you throw you progress? using do think this you going that's could out that as where many year, then estimate they're maybe Like

Roberto Cuca

Yes.

some that about and as our larger are we're primarily smaller don't accounts other ] products. sell do But There's XX% across not probably, the getting those the who may those the hospitals in portfolio. just typically both sort procedure. really doing convert. some buy just or that reconstruction, be which hospitals to primarily do physicians same not using have do other, really or this of procedure one we of the of means are [ and the we -- product one to hernia proportion repair another, going that or They using both never sell So so them are of kind

can one in and which effective. well, efficient. the car just their drive we reps to can be physicians they in They their more town, they extent become do and as get to can more across those efficient get to having means to that talking our selling that and So pitching rather institution all than

me, many both is potential to buying hospitals -- that of buy and up products those and as excuse the sell both. of So could running kinds get goal

some accounts be will point, portfolio. it buying evenly at are our XX% so XX% of or And our closer across fairly to

David Turkaly

Great. on margin and profile. was might I LIQUIFIX, wondering you comment on And then if ASP

saw something procedure. like per I think something the applicator that XX I anchors that deliver can or like

curious about we going this just as look should -- I'm to that's think year that beyond. how how So we to then and

Roberto Cuca

Sure.

So They're It's be anchors portfolio. these the disclosed single a single XX able our point, items. used even point. patient, and are only the be tackers sorts the for quite going one -- at and will similar better a XX that achieve, dollar the used they one bit than, of these we ASP per haven't smaller of exact price really though rest or margin They're we're a only It's price is staplers, applications. deployments. to and to depending on exact the have to

Operator

Our Sandler. to next of question line is come O'Brien with Piper going Matthew the from

Phillip Dantoin

the on on Congrats quarter. outstanding Matt. This is for Phil

that about way force think on you side near additional the might the rep one being group? can XXXX? provide the the in it of different before being is I color that things, sales cohorts, way Can other the you -- any post disruption the a quickly and How disruption. about the On give on more newer is group the cohort X whole reps? tenured the And productivity each of of right productivity as to think here double-digit any gains reps color the productivity the

Roberto Cuca

Yes.

of for been as about months. more the us reps I prepared with remarks, than X/X have in our So said X

were quarter. third So occurred disruption preceding be those that would that in reps that the

that So metric is breakeven, X are about seen trending the individually, just of greater X/X additional within able the And reps covering expenses regional for so X or months with us that past. them, average. at X same in achieving that curves managers that in who giving under that of towards the our we the they have that on that are past they with now the we're the to breadth be then about manage seeing own achieve productivity productivity with of we're least will sorts months months. What their training we've reps expect fewer

Phillip Dantoin

the Might contemplated be the anything That's helpful. like wings? guidance? we then see that GPOs one of color in additional And another in in is XXXX? on might any of here the that those pipeline And waiting

Antony Koblish

compliant given Yes. I a Vizient. event, That's for starts. big end when the an critical next us mean next the or scale kind probably lesser It's of early it's year less given national year is process that one most organization. harder Vizient, able this of into terms for that analysis value means And process, to that that route get we're we're and the to the But roll up committees to of cetera. IDNs go part. et able in the

would So like we've I the to right when have all that don't Kaiser good regional the are have. now, smaller like next a full that. really for we come. and and one. We're be going primary things feel other tight on X that got GPOs our the But the with and hands national IDNs ones these contracts working some of

excellent So record. far, we've track had

been We anywhere. haven't really rejected

the driven bid to contract the So time. long It's That's be and of I award process. a process matter generally the think them process off takes long starts, start going how it's contract. it then and when a to of

So like new I than where year we you'll said, contracts, but implementation the And next end early I year additions. more see it this to of be is of new start or to can some year, the expect contract going. sometime keep this machine

Operator

questions any no conference like back over for Koblish the further Tony this time. turn remarks. I'm And And further to to showing I'd at

Antony Koblish

and joining everybody look to great next and Michelle, in you We TELA us you Bio. with a interest rest have continued your thank of forward you, for and your Thank up for time, to afternoon. catching

Operator

call. for participating. you concludes This Thank conference today's

disconnect. now may You

TELA Bio (TELA) 21 Mar 242023 Q4 Earnings call transcript