Release Date: November 07, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- TELA Bio Inc (TELA, Financial) reported a strong third quarter with a 26% year-over-year revenue increase, reaching $19 million.
- The company experienced significant growth in its European business, with a 67% increase from the prior year period.
- TELA Bio Inc (TELA) successfully closed a public offering, adding $43 million in cash to its balance sheet, enhancing its financial position.
- The company achieved its first million-dollar month in Europe, indicating strong international market penetration.
- TELA Bio Inc (TELA) implemented strategic initiatives that resulted in a more productive sales organization, contributing to sustainable growth.
Negative Points
- Gross margin decreased slightly to 68% from 69% in the prior year period due to higher charges for excess and obsolete inventory.
- Sales and marketing expenses increased to $16.5 million, primarily due to higher compensation, severance costs, and additional consulting and travel expenses.
- The company reported a net loss of $10.4 million for the third quarter, although this was an improvement from the $11 million loss in the same period in 2023.
- There is potential for ASP (Average Selling Price) pressure due to the mix shift towards IHR products, which could impact overall revenue.
- The company is still monitoring potential impacts from IV fluid shortages due to recent natural disasters, which could affect elective procedure volumes.
Q & A Highlights
Q: Can you provide more details on the $5 to $10 million in OpEx savings? Are these savings sustainable beyond Q4 and 2025?
A: The primary source of savings is headcount reductions implemented in the third quarter. We focused on training our sales force to sell across both Hernia and PRS products, reducing reliance on clinical development specialists. These changes are expected to be sustainable into 2026, with potential for further efficiencies. - Roberto Cuca, CFO & COO
Q: Did you recover procedures from the cyber-attack challenges in Q2, and how much of Q3 revenue was related to clearing that backlog?
A: We did not see a backlog load up from Q2. Hernia procedures seem to fade and return to normal levels without a backlog effect. The Q3 revenue was not boosted by a backlog from Q2, as procedure rates returned to pre-disruption levels. - Antony Koblish, CEO
Q: What are your initial thoughts on growth for 2025, considering consensus is around 25%?
A: We haven't provided guidance for 2025 yet, but 25% is slightly below our current year's growth range of 26% to 31%. We will provide an update on our expectations for next year during our fourth-quarter earnings call. - Roberto Cuca, CFO & COO
Q: Can you elaborate on the international market success and its implications for the US market, especially with trends away from synthetics?
A: The UK has implemented a shared decision-making model between surgeons and patients, which aligns with our approach in the US. This model could gain traction in the US, benefiting our natural repair products as the market shifts away from permanent plastics. - Antony Koblish, CEO
Q: What trends are you seeing in the fourth quarter, and will OviTex IHR continue to grow rapidly?
A: October was a record high for the first month of a quarter, suggesting we're on track for Q4. OviTex IHR is off to a good start, and while its growth might bring ASP down, balanced selling across our product lines could offset this. - Roberto Cuca, CFO & COO
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
