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TELA Bio, Inc. (TELA)·Q1 2025 Earnings Summary

Executive Summary

  • Q1 2025 revenue was $18.5M, up 12% year over year and 5% sequential; gross margin was 67.6%, and net loss was $11.3M. Management reaffirmed FY2025 revenue guidance of $85–88M and expects 2025 OpEx to be flat vs 2024 .
  • Versus Wall Street, TELA delivered a revenue beat and an EPS miss: revenue $18.52M vs ~$17.35M consensus; EPS $(0.25) vs $(0.2075) consensus. EBITDA also missed consensus (actual ~$(10.2)M vs ~$(5.9)M consensus). Values retrieved from S&P Global.*
  • Management cited unit growth in hernia products (OviTex units +29% YoY) and continued European strength (+17% YoY) as key drivers; PRS revenue grew ~2% YoY on stronger ASP despite a slight units decline (−3% YoY) .
  • Near-term catalysts: full US launch of larger OviTex PRS sizes in plastic & reconstructive surgery, stabilized sales force with the TM/AS structure, and clear tariff impact framing (50–100 bps gross margin headwind) that phases in from Q2–Q3 .

What Went Well and What Went Wrong

What Went Well

  • Demand and mix: OviTex revenue grew ~15% YoY; PRS revenue grew ~2% YoY despite tough comp; European revenue rose 17% YoY. “We are reaffirming our 2025 revenue expectation of $85 million to $88 million…” .
  • Sales force realignment showing traction: “We’ve seen real effectiveness from our new territory manager… and account specialist… structure… already yielded quality results.” As of the week of the call: 70 TMs and 22 ASs; 25 new hires trained YTD .
  • Product innovation: Full US launch of larger OviTex PRS sizes to simplify complex procedures; surgeons no longer need to suture smaller pieces together for larger applications .

What Went Wrong

  • Gross margin down modestly YoY: 67.6% vs 68.3% due to excess/obsolete inventory adjustments tied to new products; tariff headwind of 50–100 bps expected to phase in through Q2–Q3 .
  • EPS loss widened vs prior year given the absence of the prior-year $7.6M gain on sale of NIVIS in Q1 2024; net loss increased to $11.3M from $5.7M YoY .
  • PRS unit volumes declined ~3% YoY off a strong Q1 2024; revenue growth was maintained on stronger ASP but volume softness was noted .

Financial Results

Sequential and Trailing Trend

MetricQ3 2024Q4 2024Q1 2025
Revenue ($USD Millions)$19.0 $17.6 $18.52
Gross Margin (%)68% 64% 67.6%
Operating Expenses ($USD Millions)$22.22 $19.58 $22.98
Net Loss ($USD Millions)$10.37 $9.21 $11.26
Diluted EPS ($USD)$(0.42) $(0.23) $(0.25)
Cash & Equivalents ($USD Millions)$17.3 $52.7 $42.8

YoY Comparison – Q1 2025 vs Q1 2024

MetricQ1 2024Q1 2025
Revenue ($USD Millions)$16.60 $18.52
Gross Margin (%)68.3% 67.6%
Operating Expenses ($USD Millions)$23.74 $22.98
Net Loss ($USD Millions)$5.66 $11.26
Diluted EPS ($USD)$(0.23) $(0.25)

Actuals vs Consensus – Q1 2025

MetricQ1 2025 ConsensusQ1 2025 Actual
Revenue ($USD Millions)17.35*18.52
Primary EPS ($USD)(0.2075)*(0.25)
EBITDA ($USD Millions)(5.90)*(10.21)

Values retrieved from S&P Global.*

Product/Commercial KPIs (Q1 2025)

KPIQ1 2025
OviTex revenue YoY growth~15%
OviTex unit growth YoY+29%
OviTex PRS revenue YoY growth~2%
OviTex PRS unit growth YoY−3%
Europe revenue YoY growth+17%
Cash & Equivalents ($USD Millions)$42.8

Guidance Changes

MetricPeriodPrevious Guidance (3/20/25)Current Guidance (5/8/25)Change
RevenueFY 2025$85.0–$88.0M $85.0–$88.0M Maintained
OpExFY 2025Flat vs 2024 Flat vs 2024 Maintained
Operating Loss/Net LossFY 2025Lower vs 2024 Lower vs 2024 Maintained
Gross Margin Tariff ImpactFY 2025 phasingN/A50–100 bps headwind; phases in from Q2–Q3 New detail
Q1 RevenueQ1 2025$17.0–$18.0M N/A (actual $18.5M) Achieved prior guidance

Earnings Call Themes & Trends

TopicPrevious Mentions (Q3 & Q4 2024)Current Period (Q1 2025)Trend
Sales force structure & stabilityQ4: TM/AS model introduced; Q4 churn included 11 TM departures; rebuild underway to ~88 field reps targeted for ~97 by YE TM/AS structure “working quite well”; 70 TMs and 22 ASs; 25 new hires trained YTD; morale improved Improving/stabilizing
Tariffs/macroQ3: Potential IV fluid shortages affecting elective procedures; Q4: hurricane-driven regional softness; macro disruptions noted 10% NZ tariff shared with supplier; 50–100 bps GM headwind, phased in Q2–Q3; mitigation via direct EU shipments New headwind, manageable
Product performance & innovationQ4: OviTex IHR/LIQUIFIX launched in 2024, each nearing >$1M sales; plan for larger PRS sizes OviTex units +29% YoY; PRS revenue +2% YoY on stronger ASP; full US launch of larger PRS sizes Positive adoption
Regional trendsQ4: Strength in Southeast impacted by macro; overall rebuild Europe revenue +17% YoY; ex-US opportunity emphasized Building ex-US
GPO/bundling dynamicsQ4: GPO challenges cited alongside cyber events Bundling caps at some hospitals; strategy to increase surgeon count per facility; TM/AS teamwork to defend/expand Addressing structurally
R&D/clinicalQ4: IDE approval for PRS long-term resorbable study; OPERA study enrollment ongoing Continued clinical engagement with surgeon education events; broader outreach Ongoing execution

Management Commentary

  • “We are reaffirming our 2025 revenue expectation of $85 million to $88 million…” .
  • “We’ve seen real effectiveness from our new territory manager… and account specialist… structure… already yielded quality results…” .
  • “There is a 10% tariff… we expect that our share… will negatively affect our gross margin by no more than 50 to 100 basis points.” .
  • “Gross margin improves over the course of the year… pattern continuing, slightly blunted by the effect of the tariffs.” .
  • “At the end of the last call, end of Q4, I said we would snap back… we are in the process of snapping back.” .

Q&A Highlights

  • Revenue cadence: Management expects typical seasonality with step-ups from Q1→Q2 and Q3→Q4, supported by TM/AS productivity and quotas increasing through the year .
  • Competitive hiring attrition: Dynamics “stabilized”; enhanced compensation and the AS program help retain and backfill talent; strongest reps performing well .
  • Tariff impact: First shipments subject to tariff arrived late Q1; expect 50–100 bps GM headwind to phase in over Q2–Q3; potential mitigation via shipping directly to Europe .
  • GPO bundling caps: Strategy is to increase surgeon adoption within facilities; TM/AS team selling to defend share under bundling constraints .
  • PRS growth outlook: PRS earlier in growth cycle, expected to grow faster than OviTex over time (with quarter-to-quarter sensitivity to case mix); broader PRS portfolio expansion planned .

Estimates Context

  • Q1 2025 results vs consensus: Revenue beat; EPS and EBITDA missed. Consensus revenue ~$17.35M*, EPS $(0.2075), EBITDA $(5.90)M. Actual revenue $18.52M, EPS $(0.25), EBITDA $(10.21)M . Values retrieved from S&P Global.*
  • FY consensus vs company guidance: FY2025 revenue consensus ~$80.43M* vs guidance $85–88M (above consensus); FY2026 revenue consensus ~$94.52M*; FY2025 EPS consensus $(0.834); target price consensus ~$4.05 (5 estimates). Values retrieved from S&P Global.*

Key Takeaways for Investors

  • Revenue trajectory normalized with double-digit growth and a clear seasonal cadence; reaffirmed FY guidance signals confidence in execution and sales force stability .
  • The quarter’s revenue beat was driven by unit growth in hernia (OviTex +29% YoY) and European strength, while gross margin and EPS were pressured by inventory adjustments tied to new products and the absence of last year’s divestiture gain .
  • Expect modest gross margin headwinds from the NZ tariff (50–100 bps); management outlined mitigation levers and still anticipates margin improvement over the year as inventory phasing normalizes .
  • Commercial momentum should benefit from the TM/AS model and incentive redesign, which management indicates is enhancing retention, coverage, and new account penetration .
  • PRS portfolio expansion (larger sizes) and growing robotics/MIS hernia presence (IHR, LIQUIFIX) broaden addressable use cases and should support mix/ASP dynamics over medium term .
  • Watch GPO bundling constraints and hospital category placement; management’s facility-level surgeon adoption push is key to sustaining share under caps .
  • Near-term trading lens: a revenue beat with reaffirmed FY guide and clear tariff quantification tends to be supportive; monitor Q2 gross margin phasing and sequential revenue step-up to validate cadence .