MALVERN, PA — TELA Bio, Inc. (Nasdaq: TELA), a commercial stage medical technology company focused on designing, developing and marketing a new category of tissue reinforcement materials to address unmet needs in soft tissue reconstruction, reported financial results for the first quarter ended March 31, 2020.
- Reported revenue of $3.7 million for the first quarter of 2020, increasing 13% over the first quarter of 2019
- Continued progress on BRAVO Study with successful completion of 20-patient follow-up at 24-months, which has shown a 0% rate of hernia recurrence among those 20 patients, and 2% among the first 57 patients who reached one-year follow-up
- Implemented preemptive measures to curtail near-term spending to maintain financial flexibility
“We want to express our gratitude to our partners in the medical community who continue to support and treat patients in need amidst this pandemic. I also want to thank our TELA Bio employees who have shown resilience and have come together to serve and support our patients and customers,” said Antony Koblish, co-founder, President and Chief Executive Officer of TELA Bio. “Despite a positive start to the year, the deferral of elective surgical procedures in which our products would be used has negatively impacted our revenues in the first quarter of 2020. As we navigate through this pandemic and look toward recovery, I am confident in our strong foundation of innovative products and dedicated team. We believe we have structured our response to mitigate business disruption and remain in a strategic position of strength to drive growth over the long-term.”
First Quarter 2020 Financial Results
Revenue was $3.7 million for the first quarter of 2020, an increase of 13% compared to the prior year period. The increase in revenue was primarily driven by an increase in unit sales of the Company’s products due to the expansion of their commercial organization and increased penetration within existing customer accounts. Though TELA’s revenue increased over the prior year period, it was impacted by lower than expected procedure volumes in the second half of March 2020 due to hospitals and patients deferring elective procedures and other factors related to the COVID-19 pandemic.
Gross profit was $2.2 million for the first quarter of 2020, or 59% of revenue, compared to $1.8 million, or 54% of revenue, in the same period in 2019. The increase in gross margin was due primarily to the decrease in the charge recognized for excess and obsolete inventory as a percentage of revenue.
Operating expenses were $8.7 million in the first quarter of 2020, compared to $7.0 million in the same period in 2019. The increase was due to the expansion of the Company’s commercial organization and increased costs associated with operating as a public company.
Loss from operations was $6.5 million in the first quarter of 2020, compared to a loss from operations of $5.2 million in the same period in 2019.
Net loss was $7.2 million in the first quarter of 2020, compared to a net loss of $6.0 million in the same period in 2019.
COVID-19 Pandemic Updates
TELA’s business has been impacted by the pandemic as physicians and their patients are required, or are choosing, to defer elective surgery procedures in which TELA’s products otherwise would be used. However, TELA is currently employing virtual selling programs and it expects to continue to creatively adapt its sales and marketing plans as it better understands the effects of the COVID-19 pandemic on TELA’s business. TELA implemented salary cuts for its employees and initiated actions in April to generate savings in areas such as travel, events, and consulting. TELA continues to work closely with hospital and physician customers and suppliers to navigate through this unforeseen event while maintaining flexible operations.
Based on the ongoing impact from restrictions on surgical procedures and shelter-in-place policies, the Company expects revenue to decline in the second quarter of 2020 as compared to the most recent completed quarter and same quarter in 2019. At this time, the full extent of the impact of the COVID-19 pandemic on TELA’s business, financial condition and results of operations is uncertain and cannot be predicted with reasonable accuracy. As a result, TELA will continue its suspension of full year 2020 revenue guidance.
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