TELA Bio, Inc. Q4 FY2024 earnings call

• Q4 revenue was lower than expected due to lower U.S. sales force headcount, rep departures, and external factors like Hurricane Helene and holiday impact on procedure volumes.
• Implemented revised commercial strategy with team-based sales approach, redefining roles of territory managers (TMs) and account specialists (ASs). ASs provide procedural case coverage under top TMs, aiding TM productivity and rep integration.
• Plan to hire more ASs to enhance sales reach. By end of 2025, aim to have 97 field-based reps (~76 TMs and 21 ASs).
• Product portfolio expansion: LiquiFix and OviTex IHR product families gained traction in 2024. Anticipate launching larger PRS products and new long-term resorbable hernia products in 2025.
• Invest in medical education and surgeon outreach, including live symposia, webinars, and society meetings.

In the fourth quarter of 2024, TELA Bio generated $17.6 million in revenue, growing 3.8% versus Q4 2023. For the full year 2024, revenue was $69.3 million, growing 19%. Revenue from OviTex grew 17% and OviTex PRS revenue grew 21% for the year. OviTex unit sales grew 28% in Q4 and 33% year-over-year, while PRS unit sales grew 11% in Q4 and 31% year-over-year.

• 2025 revenue expected to be in the range of $85 million to $88 million, representing 23%-27% growth over 2024 full-year revenue.
• Operating and net loss expected to decrease in 2025 compared to 2024.
• Q1 2025 revenue expected to be in the range of $17 million to $18 million based on current performance visibility.

• Rep departures, including productive reps lured by wound care companies with financial incentives.
• External factors like Hurricane Helene impacting surgical volumes and IV fluid shortages.
• Holiday impact potentially reducing surgical procedure days.

Q: Frank Takkinen asked about territory manager departures, gross numbers, hiring, and ASP assumptions.

A: Antony Koblish responded that they lost 11 TMs in November and December, are now at ~88 field-based reps with a mix of TMs and ASs, and discussed ASP impacts from product portfolio transitions.

Q: Caitlin Cronin asked about revenue cadence, rep retention, and MISS in Q4.

A: Roberto Cuca discussed revenue seasonality expectations, Antony Koblish talked about account specialist role as a retention tool and comp plan adjustments to combat rep departures, and Antony also discussed the bulk of Q4 shortfall being due to rep departures.

Q: David Turkaly asked about why reps were lured away and TM vs rep departures.

A: Antony Koblish mentioned wound care companies' incentives and poaching, and discussed TM and AS roles and backfilling.

Q: Matt O’Brien asked about Q4 shortfall, growth in other territories, and ramp to full-year guidance.

A: Roberto Cuca and Antony Koblish discussed backfilling, seasonality, and confidence in reaching full-year guidance through team-based sales and comp plan enhancements.

Q: Mike Sarcone asked about competing with guarantees and retaining top performers.

A: Antony Koblish stated they'll retain top performers with enhanced comp plans and team-based strategy to mitigate rep attrition risks