TELA - Earnings call transcript Q2 2024

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Operator

Good afternoon, ladies and gentlemen, and welcome to the TELA Bio Second Quarter 2024 Earnings Conference Call. [Operator Instructions]. A question-and-answer session will follow the prepared remarks.

As a reminder, this conference call is being recorded.

I would now like to turn the conference call over to Louisa Smith from Gilmartin Group.

Louisa Smith

good and Marvin, you, afternoon, everyone. Thank

TELA quarter of today, is on Bio the released second the available website. company's for results the XXXX. release financial press Earlier A of copy

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

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

factors and development resources environment, various filings, performance. regarding the procedure include, pipeline impact or without conditions volumes, opportunities, changes identified These limitation, of statements strategies, capital the our and marketing in surgical macroeconomic potential, product operating may in sales product regulatory

the that, over like now to call I'd turn to Tony. With

Antony Koblish

Thanks, Louisa, everyone. afternoon, and good

you Thank TELA Quarter Second Earnings joining Bio Call. XXXX for

further call, we questions. which our initiatives, on During Roberto provide results open QX business strategic will and I'll the the updates call for elaborate on before after up

biggest X strong revenue to that weeks. GPO second operations the quarter hospitals. XXX detected separate attack normal additional that The TELA of May of to it persist remained million. second XX% recently was the of weeks in the second added a grow most manage approximately $XX.X later, half transient at but ransomware The issues products a appears faced and and challenges some couple through consists to the that for quarter, During expect into still of quarter, do it these in resolved not have in return consequently may the and the to customer taken we XXXX. fastest-growing week attack customer were and our able Demand adverse we the challenge our

As month our affecting reduced to million products. of and a by that about during affected negatively this $X.XX substantially quarter hernia both the PRS million a our customer has $X.XX this usage revenues result, We the for surgeries quarter. estimate of

of by one single our believe our most the quarter, territory cybersecurity adversely in during similar largest experienced at successful but Separately, XXX,XXX. a reduced customers hospital least and our surgical event sales we affected which volumes also independent

our quarter we in that sales some PRS other exacerbated was these the some and are this of of lightness in the surgeons case, who second departure challenges saw We product. via or a retirement which in in Finally, case several market death reliable our the bolstered users conclusion. confined like participants, quarter by one second procedure July were to volumes believe in

We have continue to XXXX initiatives of over the trends, of overall year, of initiatives revenue I'll and reflecting XX.X headwinds delivery revenues we XXXX. shortly. we expect the sales ongoing organization, on a $XX QX within of $XX.X describe our number sales that current deliver X And million implementation to those end to the of million over XX.X% the affect or the at not in expect but Essentially, range. for to the timing growth quarter bottom -- of based second

and FDA-approved next-generation trocar only OviTex X feedback in portfolio, compatible surgeons permanent and further our market, synthetic configurations product the been hernias, dominated has designed March available from April, existing As positive which platform for the repair LIQUIFIX, tissue liquid penetration products it adhesive portfolio internal for is for a in hernia allows continue historically for receive launched inguinal product have use IHR, procedures. relates soft to we X our and to surgery laparoscopic in the specifically who use and by inguinal we IHR assisted robotic and complements utilized meshes. in into

shift market, Very as the product few is the our mesh space are players synthetic TELA well in as in an permanent poised to inguinal trend. we're to as that and deliberate away part to from predominantly seeing positioned alternative market used the of a inguinal be repairs. underlying Across plastics capture share

the In laparoscopic that hernia among units second OviTex a robotic and including for grew smaller XX% of procedures. inguinal with year-over-year share the repairs, units employed in quarter, growth greater are

cases. we We robotic expect we Europe, in of of experiencing to awareness IFR greater ease was adoption OviTex launched U.S., product this the are and around within benefits significant educate XXXX. surgeons see the as OviTex -- its use on product the continued in where of Outside IHR create particularly in market, momentum

yet CE As received not OviTex a PRS certification. has reminder,

hernia the purchasing organization, contract in Sana The Einkauf, June, X Italy. secured Germany, Switzerland, unit partners We $X.X in Great OviTex the versus Sana's and Austria, Germany. in to Ismaning, QX this in sold year-to-date million group in agreement provides in countries, largest is with XXX Britain, the Spain XXXX, of we long-term XX%. is portfolio Netherlands, and now GmbH with a In million the in Sana access of GPO country. Europe sales $X.X growth achieved Germany, Logistik corporate

gross our second the U.S. given our EU of manufacturer. structure were our with total margin agreement XX% revenue as revenues in In with of the same quarter, the the

continued OviTex on market, a for forward launched England that. look regarding so EU strong As tuned with we Service in expect collaboration We Health more a National our from the colleagues. you growth product stay updating to recently soon

through These educational in labs have make invasive and headquarters, a strong We Malvern significant with focus U.S. peer-to-peer to surgeons various OviTex labs both include in Bio other procedures. efforts. the minimally with programs comprehensive our training our cadaver to In educated we programs and strides and robotic VIP EU continued and QX, various globally using XXX on education visits sections. over TELA

care professionals was which engaging health One XX the saw with in symposium Las our in our date standout reconstruction to products. Vegas attendance wall with event largest abdominal May

da thousands several Intuitive in use we Additionally, a in by X Vinci conferences general exclusive opportunity but and exposure women the Vinci to and attended X,XXX surgeons hosted hosted robot more equally TELA. meetings which Intuitive with Connect, for smaller participated surgery, surgeons national Surgical. impactful regional of and da who than

compatibility XXX hernia attending robotic unique look forward September. excited to repair, in Intuitive and deepen for are relationship we OviTex's to this Given

are away permanent a XX the gaining these surgeon OviTex. momentum publications synthetic of see We works meetings TELA education globally on and also on or the now and driver mesh. journals. podium to adoption medical presented and from behind the transition context We key events as key of in up within industry is published

rates efficacy feedback remains adopters. market to continue even OviTex, recurrence or and gather the conservative more we among to associated As with the evidence about who positive, tend surgeons clinical slower low be

and our serving of for We are expanding driving which preference-driven market premier share products are surgery, with the offering repair to committed awareness and markets. of and are plastic hernia breadth portfolio both reconstructive

increasing secure access we instrumental and organization best as of experience operational new and He to sales already growth with refocusing balanced, supporting side, the data-driven Greg maturing and and the a led drive be Firestone. sales phase has May, we we organizations. sales GPO has our the commercial next force to Greg contracts the productivity and committed our XXXX, second TELA the organization. navigating one with will forces efficiency and have further trained quarter. In are U.S. by been Greg pleased IDN selling. On made rep of marketplace. I across securing Commercial He appointed now is we by to on Chief the strategy enhancing the Greg Officer progress GPOs contracting pivotal as story commercial refining in IDNs. training, key to metrics having we in the am sales since

have team We a place. in sales mature

We driving are leverage. operational

to our expectation very future, of in strong another year the for We points have on our our guidance eye growth profitability TELA. near and of

over I'll that, to Roberto our turn on financial With specifics the call provide more to results.

Roberto Cuca

Thanks, Tony.

with prices grew international and XXXX broadly growing of addition from was an unit driven to in in year-over-year OviTex quarter PRS our XX% offset growth OviTex of hernia sales revenue invasive inguinal due success. double-digit repair million, the minimally product sales new showed mix expanded markets of customer organization. accounts second selling by The more in the as increase primarily the for existing the commercial increased a X% customers, to penetrate and growing strategy period. by shift products XX% within by was $XX.X penetration average and caused our under partially decrease to in growing This Revenue a

revenue smaller in of XX% in XXXX, of we was was as result to quarter. second As the of for first quarter, obsolete Tony purchases the affect commercial for half half mentioned, a customer-focused expect half there was The first compared the performance one adverse quarter. larger XXXX excess XX% Gross and the second the period. to dynamics as quarter charges in for revenue reflecting margin before the inventory meaningfully primarily the XX% was prior to percentage a general of up during over of of the do second the more Growth inventory decrease adoptions XXXX. higher due not couple and effect but a year in

higher expense. in $XX.X was XXXX. and our due Sales the commercial This marketing increased same compensation in marketing to expenses and XXXX a result million offset the increase period fee, second to marketing of distribution as expanded expense of compared $XX.X lower mainly which organization, was in quarter costs a travel million

was in period compensation decrease General offset in million $X.X higher of to the the quarter to and The the R&D study and costs, million million to is due development administrative compared expense compared was primarily $X.X benefits. XXXX. $X.X year. prior expense million and lower in $X.X which same second

of $XX.X million $XX.X the quarter million the compared We in the XXXX the ended first from in period. Loss period quarter of the $XX.X second second with prior year XXXX million equivalents. in and quarter cash was $XX.X loss Net was in cash $XX.X million compared same operations to to XXXX. million in in

outlook the for to XXXX. Turning

to $XX.X full project be in growth revenue range XX% XX% million representing $XX.X to continue to year. We million, the the of for of year prior the from to

contribution we of over less XXXX, steady even than both year. NIVIS. the course or even contribution excluding loss and Relatedly, remain consumption so to from net expect XXXX of declined course of in be quarter-to-quarter the NIVIS. expenses second Operating divestiture divestiture year operating in the loss half should from and loss excluding the of lower the lower net the Additionally, will cash continue be loss from to XXXX, sequentially slightly of meaningfully that in the the operating the over again,

this, share divestiture quarter, related payments the begin revenue will we to in to Added receive third of NIVIS. to the

us X operating our equivalents revenue, to continue we Over leverage to $X combination that of and and growing next of this cash be and million. expect sum be fund will as With the profitability. the payments million $X to payments, improving could NIVIS course sufficient at least quarters, much incremental these as to will cash

call that, the With closing remarks. Tony I'll hand for back to

Antony Koblish

Roberto. Thanks,

pleased progress enormous and the I'm second positioned TELA and resilience company's for Bio in been never by I opportunity in of for quarter, the reasons. believe the several success better by has excited that I'm us. front

First, do an I've will leadership very team by products. confident I'm of excellent so our adoption job far, and Greg's he of been portfolio our impressed seasoned driving that of commercial in

Second, well we position for have repair. shift the ongoing GPO us that broad possess coverage hernia and products robotic to

most products patients at surgeons competitive importantly, Finally, outcomes and a and our price. unparalleled offer clinical

to We of essential can for growth for years are confident success for come. this combination that drive factors TELA solid

line with now Please go open the to Marvin ask So ahead. questions. your that, I'll for

Operator

from Our Instructions] Lake of Frank question of Takkinen Capital. the line Street [Operator first comes

Frank Takkinen

are commentary. follow-up able those things a to does bit of Can these the backlog? mesh? on understand account what second use mesh? physicians backlog I'm a these I to trying some about what's of at really with And was you Were is and of really and the to cyberattack occurring that just of a understand when Were lead the using kind the guide little confidence the the think cyberattacks procedures help when in how level hoping half occurred? they of better into the no different And year? start behind occurred, us this to types

Antony Koblish

Frank, off. Yes, that start I'll

basically getting to our is the are hostage. happening patient best what held of the was So understanding, records

is lot things are of creates by done the where hand what on a done it treat are now. patient, So a does that to situation the that EMR

of aspect prescriptions, is So every impacted. surgical I note it, procedure dictation. mean, name you a

don't think it procedures procedures and the do they makes do. which So to hospitals which about to have they have deeply

up and other what great us don't those right, to off for implementation. as if we've facilities. shipped they've have That's From facilities yet, patients our of we not other heard, running part

the affected the that to that's secondary others, to those the out. day best and most, but our their that the So attacks and the of patient the even and primarily been sort day function have of GPO the the us knowledge, there -- may just attack -- hospital the ones up medical were in are one ability system records of tied locking to outside

Roberto Cuca

Yes.

do as not arrive add Frank, at see affected where so I'd you'll hospital what departments. ambulances to And the accounts redirecting is hospitals so was some system some if to emergency you their have them alternative research,

So for very, at doing any. they procedures, if X weeks, least very were few

to they to their access before speed systems, they of lift able before. and where took getting like it regain to were they couple When It up ransomware the were somewhat back weeks began slowly. sounds another they were attack

the involved in procedures other that so And or to were are delayed redirected locations. we either

think hernia worth the sent don't were big repairs are we other watchful experience, approach probably waiting. in hospitals, COVID-XX to the biggest difficult surgery one they delayed. the other to in there's going As simply a that reschedule, procedures type We PRS than be that were are a to expect It's hernia surgeries but and hernia eventual about rescheduled, repairs to month of backlog. particular, is the

you delay for month. a So can't those

is those the may less up the longer in hospitals that COVID-XX, hospitals. hospital they get the ones, which at little remunerative premium though as before to up expectation speed prioritize bit to remunerated speed system more means as surgeries to to to gets want that take a Our

close off half All quarter. said, the initiatives that, as lost feel that that are back second we second all got particularly second have we work, from force result sales that morale being this added Greg to our and in that and been quarter and a about something normal. procedures we in that to able is to that's to indications, isolated performance in the strongly has see the in of we very And that recoup the perform July kicked the that pretty the things do the to

Antony Koblish

keep just recall, structure bit add most Frank, mind, right? is in sure. But to if for to going important little the mean, I'm or biggest, the a to not you that the GPO us, more, super It's color. I this that's over of was is that contract us, leader, so right? the us year, favorable also not right? the fastest our and and player and the market growing. not yet Dual-source it's contract other another to So the contract, player had annualized

for painful acutely So us.

Frank Takkinen

OviTex X I'll we both in in, color. same to million. ask now we revenue -- maybe to And to guided of QX time. get I'll split range kind the helpful the I'll Okay. mix? That's sneak million QX about the versus in of a $XX.X should about think $XX.X them should IHR with and think at blended And then the of ASP how How

Roberto Cuca

with start question. first I'll So the

the quarter. we be to expect revenue more of the So fourth in

effects. off, our the way regain ramping about that will think you some ability is the to it driving -- we it, is what initiatives Greg kicking If think those be have and

see it expect quarter, you'll So of than more fourth in both. see in third to effect we the quarter an although the

expect the more space. As to down IHR begin in average get regards volume to ASP, ASP as we we do

always As in at expected on repair a term average the larger of lower will end our the we've general ASPs we spectrum. that hernia because the the matter, market longer entered be

So with be into with pieces. smaller markets with rest repairs we've pieces. that the ventral And always entering large of by big the we'd the expected moving

gaining of the greater of as an So repairs. a range different share It's we thing. outcome this view bad don't across

Antony Koblish

the every what some Frank, may We out rate little products should correct. now between IHR. out want Roberto of the I a it grow, ramp the said think large large complex but the And of cases But point. it is sort the the be might sync then. mix definitely, and slope Both and choppy, volume pieces be as at with we of

Operator

next line comes Our Cronin the question from Caitlin Canaccord Genuity. of of

Caitlin Cronin

due burn anything was to this to the high Was getting revenue still here? pretty leverage growth call quarter. just or lost Cash mostly to not really else this out

Roberto Cuca

Sure. it. That's exactly

had earlier it the May having revenue disruption began even higher been towards of higher, about in May, learned think May. though end through of we partway the you -- If the been it

second did not on and that there that was -- as But OpEx exactly on ourselves changes offset some were quarter happening expense We adjust quarter. in get flexibility the indicated the expenses determine and all with as opportunity with had small, had you much to give make dropped it the we So the of expect we timing we we of within doing analysis what in the additional try top to the quarter. to but was to to minor bottom back second guidance. revenue during more the have should saw that line, track

believe front-loaded we be me. that we'll revenue position. depending be thing X on third equivalent the start payment, could may getting obviously which that the sensitized share months -- as how one margin coming And quarter, and in cash It contribute investors X gross to will XXX% then or And less ramps. be to not that more quickly excuse our to over quarters, that will

Caitlin Cronin

gross the then expectations margins, And given launch just what are going broadly? your on forward Great. really more IHR

Roberto Cuca

the IHR, the manufacture that our from with a product for revenue manufacturers way So pay we we share.

give we That's true of XX% portfolio adjustments across in very the So cases. our with them minor certain revenue.

products are share. revenue So of cost to We standard even split lower though close that the they be shipping. XX% fairly ASP, should those

off. So that about takes a X point percentage or

so of little a plus long-term is the And margin goal about bit. gross minus XX%, or

Caitlin Cronin

quick And the Awesome. between one. What PRS? split just this quarter a was then and OviTex

Roberto Cuca

XX% total of was revenue. the PRS quarter, this So

Antony Koblish

Right. A down. bit little

Operator

from line comes question Piper the O'Brien from of Matthew Our next Sandler.

Matthew O'Brien

Just U.S. I the you the OUS? XX%? up one million in clarification hear right? versus $X.X was quarter, OUS Did was What split question. about

Roberto Cuca

Correct. Correct. Yes.

Matthew O'Brien

quarter. to at the million low I'm end to range on per QX sorry be hard the you $XX I'm the the year it. is the get to looking And guys, level. average year, model about slower QX. than of It's just the -- of up so for rest guide all the for Okay. going assumes Obviously, $XX the and that push Got to and then way million but

So other given know the be why went we is even because below what in can those you what rate, did some to the going like end then growth that a saw don't bit the number, a just from should fact and seems probably of you of you go that that, I to share? now the get not And cases, to you're little able it right July range, low hospitals. see the disruptions they

why again, the of bottom even is end So number? the range the right

Roberto Cuca

So for thanks question. the

with first, start me So let July.

So as slightly you know, our to backloaded. be quarters tend

the the first of of month So -- quarter, of first quarter to lowest quarter. quarter the the be tends XX% below the

So we quarter quarters. on to is of looks month first the one other of the first look the at quarterly basis months that of things a how compared

can history. that you quarter So tell of what that July was our I had we've first highest is a in the month

So in the seen back the of that for had particular, that suggests we that have performance in that you've the it in of track kind that you and should the the are third quarter have because quarter on second July, lasted wouldn't into disruption suppressed first growth month that, seen quarter. the

plans in X less since And our than been he months we then The even achieving the about comfortable Greg which had has little makes we second took the place to over to, the year, we that hit a felt what about. the that over second the bit that ago. guidance, half strongly need of at us beginning doing is thing amount

May, we of into end system expanded that in our forces, May extended year So and of we one third revamped this he to sales retargeted quarter compensation disruption at and it. instrumental in this education year our has the in response in was -- structuring of was which our took which and has our then of that he extended that last our -- the over and in

us to lot And a that they're we're the being quarter. it shortfall with the about a up morale responding we seeing force able confidence so sales second our how of in exhibiting saw what result, the and to make they're as gives and

Antony Koblish

a all the weighted training I Yes. the going more programs towards elements That fourth all bit kick be the the Matt, it's and and quarter once to little in. said, think, all

Matthew O'Brien

you I to did the to to other have you end? that factors for Okay. the room you to are there much -- guess perfectly how considering factor all wiggle way were get And some decisive go Does really there? or to everything in? low get

Roberto Cuca

Yes.

over been range this of guidance as the view year, describing So course to as investors. we this a we've commitment

we one And we it rather where before we any full be in of it. said upside, So quarters resources we learn the guidance had there's the express if the going over than years of adjust through the course to achieved in data that of place placed points. to a performance we year early we that comfortable did felt what the hit later what to number some the additional that would trying on had we amount all could

So with close the confident range. hit considerable the expending sure pretty get the feel we just top that the will make very of to not be we the of but efforts range bottom end end to range, and we at

Operator

Our of Michael from the comes next Jefferies. line of Sarcone question

Michael Sarcone

little metrics. Greg you guess, what in a how and making and you the is color productivity? doing you I training give specifically mentioned the drive going incremental bringing more productivity changes refining us then Can on that's You give Firestone to terms on us more he's some talked about of little color? could a of and processes Greg

Antony Koblish

Absolutely.

our So contracting, guys commercial been on more the really us for of Greg but GPO one et with He's know. top has way, as been years, you along X focused cetera.

like we've lot GPOs. we the of into to got progress towards now transition in made a getting attainment synthesizing that the And with feel GPOs. implementation I So

the focused And and dynamics contract, a certainly. talk and a to on There's there chain, subtle mesh going settle messaging chain GPO. important this polypropylene I been go through messaging hospital, right? polypropylene, at at seeing products. going be and but in point some dynamics, more at other is GPO as the It's those mesh polypropylene competitive subject competitors, the have in different. differences for litigations. at future. level pricing we is transitioning from transition away the in level at of natural training, lots companies think right, So right? So talk supply repair are at There's of deeply a with activity supply to strategic that the the messaging And to track you talk the these Greg has So is we're that one towards of things is track inordinately when

this having Greg when contracting middle and supply to of So with we be in us strong to strong the need chain. allows GPO be messaging, right? It's with

has long credibility is The young is, He's for which other very factor He organizations. Greg gravitas been time. him, like a ourselves. sales for run around a has about a organization and very, good

the we the we organization, strength weakness everybody And did basis, their talk around it sales continue develop to benchmark leadership GPOs which track is really in track our testing or to managers, whether And talk he's around is they're very track on terms messaging, moving and allows commanding accountability. and education, way brilliant with everybody. individually. terms efficiency, he's thinking and got people strengthen things their leverage that And one an strengthening a of us and the training to and right? So going that's to profile for is of So for since customize and and sales territory the rather he demand that going fast, in force started, is is drive in than done of of brush going whole part talk everybody he surgeons. training, broad individual to and

our that staff. doing done he's have a that we've other we job on he's surgeons The that X thing implementing great is

So the in as now do we've But training Langstein year joined had on well. X. a for surgeon discussions Howard us helping staff hernia and us Friedman, has been peer-to-peer Bruce or instrumental on general He's side.

PRS of Plastic customer at unfortunate programs supply up as big Chief and Very the and until he's University our presenter awesome educational was of and he's also was the recently, He a peer-to-peer and the of Rochester. retired. Surgery He One in man, sophisticated business. PRS part teacher well. deployed educator, chain of being as but surgeon losses of ours

last co to of to So been it question. good all you Thank several force had and he explain evident for was elements for looking right these the Greg after the sales has next as that a that. the that the us to was for for level. It just us take stuff to me months,

Michael Sarcone

Got for maybe it. And one Roberto.

in in I your the think near mention future. you on prepared the you've commentary, got profitability did eye

So on timing of What profitability get really and can to and kind talking maybe about that. we are elaborate you more what there? to you need see

Roberto Cuca

Sure.

we savings, get the growth able to and million the is to sequentially potentially that declining the top revenue together to year, of to should us is OpEx range from although over can hold our even OpEx the on with that, keep revenue $X bottom drops combined contribution revenue that, to that year-on-year of $X share with additional next year, flat OpEx that then even that top obviously, to to and declining cash next of cash to year So year some million course such this NIVIS that usage. that from seasonality goal profitability. with we on growing flattish the reduces next be our line should consumption, But there expect

flow cash So breakeven.

Operator

line Turkaly question JMP. from next David the Our of comes Citizen of

David Turkaly

that a position you the in CCO, did past? Tony, have

Antony Koblish

of we traditional experiences. Yes, of who he of a more senior guy. of a did. Yes, set type executive was more Greg fulsome is strategic a VP sales has more of

David Turkaly

Chris there? is Smith still And

Antony Koblish

last the the moved VP years. been couple in No. that's place of now focused senior of business Sales We Greg on. leadership around for the and has

our that Greg, to area report they've of are directors group most years. that senior a have in most folks, been talented, We with for us

very organization. tenured it's So a

David Turkaly

the much? the about about be a X we million even that think possibility? $X just it's over just is Or but NIVIS this share, revenue Is a that one, as And one too I'm trying think mean could I last half quarter? I year. to know that just quarters, back of

Roberto Cuca

Yes.

it is in of quarters, structure And first the for what quarter the NIVIS. sells XX%. X the then we each that second the XX% quarters, for owner X we get So -- get new we -- of in of

is owner fourth new able million. to quarters, the would $X that, $X get could and it, sell which we or million quickly potentially be how the they on then depending So third half of would in ramp

Antony Koblish

Yes, CEO it's product quite launching but on past has ago. the optimistic uptake a the been just or in so month

Roberto Cuca

Yes.

it it quarter, that the agreement is this -- of So revenues. the second right, triggers the triggered launch, for quarter since it that launched in is the first structured full way

Operator

at questions the Thank program. in participation I'm you your conference. for This showing today's no does further this time. conclude

You may disconnect. now

TELA Bio (TELA) 12 Aug 242024 Q2 Earnings call transcript