TELA Bio, Inc. Q1 FY2025 earnings call

• Revenue in Q1 was $18.5M, up 12% y/y and 5% seq. from Q4 2024. OviTex and OviTex PRS grew ~152% each. European biz up 17%.
• New territory manager (TM) and account specialist (AS) structure: 70 TMs and 22 ASs as of the week, plan to augment TMs, trained 25 new sales team members (11 TMs, 14 ASs).
• Market trend: Shift from plastic mesh to natural repair products, OviTex has over 69,000 hernia implantations since inception. Launched two larger sizes of OviTex PRS.
• Tariff situation: 10% tariff from NZ, shared with manufacturer, expected to negatively affect gross margin by 50-100 basis points; working to reduce impact by shipping to EU distribution facility.

In the first quarter of 2025, TELA Bio generated $18.5 million in revenue, representing 12% growth over the prior year and 5% sequential growth over the fourth quarter of 2024. Revenue for OviTex and OviTex PRS reinforced tissue matrix products each grew approximately 152%. The European business saw 17% growth over the first quarter of 2024. Revenue contribution: OviTex and PRS contributed significantly to the growth, with European business also making a notable contribution.

• Reaffirmed 2025 revenue expectation of $85 to $88 million, representing 23% to 27% growth over 2024.
• Expect operating loss and net loss to decrease in 2025 compared to 2024.
• Anticipate 2025 OpEx to be flat compared to 2024.

• Tariff impact on gross margin, expected to gradually affect Q2-Q3.
• Macro factors like changes in surgical procedural volume, regulatory environment, which could impact results.

Q: Regarding the cadencing of revenue through the back half of the year, what are the key factors to continuing sequential growth?

A: Similar cadence to prior years with bigger steps from Q1-Q2, Q3-Q4; driven by reps' continued traction, increasing quotas, and AS program assisting in revenue capture.

Q: On competitive hiring, any changes in the dynamic?

A: Situation stabilized, back to natural process based on performance; TELA Bio offers game-changing products, strong clinical data, and good incentive program.

Q: Tariff impact on gross margin, timing?

A: First shipments affected recent weeks, starting to affect Q2, gradual shift in Q2-Q3; gross margin improves over year but blunted by tariffs.

Q: Bundling at GPOs and volume share caps?

A: Focus on getting more surgeons using products, enhanced TM-AS structure helps manage coverage.

Q: Growth rate expectations for OviTex and PRS?

A: PRS in earlier growth cycle, expected to grow faster than OviTex initially, though growth rate may slow; PRS has higher ASP and broader product portfolio.