Press Release

TELA Bio Reports Second Quarter 2022 Financial Results

August 10, 2022

MALVERN, Pa., Aug. 10, 2022 (GLOBE NEWSWIRE) -- TELA Bio, Inc. ("TELA Bio"), a commercial-stage medical technology company focused on providing innovative soft-tissue reconstruction solutions that optimize clinical outcomes by prioritizing the preservation and restoration of the patient's own anatomy, today reported financial results for the second quarter ended June 30, 2022.

Recent Highlights

  • Reported revenue of $10.4 million for the second quarter, representing growth of 38% over the corresponding period of 2021;
  • Increased demand for OviTex® and OviTex PRS Reinforced Tissue Matrix products in the second quarter of 2022, resulting in a year-over-year revenue increase for each product of approximately 22% and 87%, respectively;
  • Entered GPO contract with Premier Inc., an alliance of approximately 4,400 U.S. hospitals and 225,000 other providers, that will provide access to additional hospitals within the Premier network and allow for deeper penetration into our current markets;
  • Highlighted additional positive data from the BRAVO and ReBAR studies evaluating the use of OviTex® Reinforced Tissue Matrix in hernia repairs, which will be presented at the 2022 American Hernia Society Meeting; and
  • Secured up to $50 million in debt financing from MidCap Financial, including a $10 million tranche that can be accessed at TELA Bio’s option upon meeting certain conditions, and upon closing used a portion of the proceeds to repay our existing $30 million facility.

"We are very pleased to see the growing acceptance of OviTex. We were able to hit our revenue growth targets despite a meaningful rise in COVID-19 infection rates towards the end of the second quarter. Our soft tissue preservation and restoration products are gaining market share as our sales team is effectively educating payors and surgeons on OviTex’s quality, functionality, and value proposition,” said Antony Koblish, co-founder, President and Chief Executive Officer of TELA Bio. "We also continue to see positive clinical results and favorable recurrence rates from the use of OviTex in both our BRAVO patient population and patients studied in other retrospective studies, including those using the ReBAR techniques. These clinical results, along with the recent announcement of our GPO contract with Premier that will take effect in October, and the continued expansion of our sales team should help us drive continued adoption of OviTex and allow us to take further market share from traditional synthetic and biologic mesh products."

Second Quarter 2022 Financial Results

Revenue was $10.4 million in the second quarter of 2022, an increase of 38% compared to the prior year period. The increase was due to the expansion of our sales force, increased market adoption with existing customer accounts and stronger international sales.

Gross profit was $6.6 million in the second quarter of 2022, or 63% of revenue, compared to $5.1 million, or 67% of revenue, in the same period in 2021. The decrease in gross margin was due to a one-time cumulative amortization charge recorded in the second quarter of 2022 as we deemed our final milestone target under our licensing agreement with our manufacturing partner probable of being met.

Operating expenses were $16.8 million in the second quarter of 2022, compared to $12.4 million in the same period in 2021. The increase was due to higher salaries and employee-related expenses from additional headcount as we continue to expand our organization, increased travel expenses and increased professional and consulting fees.

Loss from operations was $10.2 million in the second quarter of 2022, compared to a loss from operations of $7.3 million in the same period in 2021.

Net loss was $12.7 million in the second quarter of 2022, compared to a net loss of $8.3 million in the same period in 2021.

Cash and cash equivalents on June 30, 2022, totaled $27.7 million.

2022 Financial Guidance

We expect full year 2022 revenue to range from $42 million to $45 million, reflecting growth of 43% to 53% over full year 2021, however a higher-than-expected impact from the COVID-19 pandemic in the back half of the year could materially affect this projection.

Conference Call
TELA Bio will host a conference call at 4:30 p.m. Eastern Time on Wednesday, August 10, 2022 to discuss its second quarter 2022 financial results. Investors interested in listening to the conference call should register online. Participants are required to register a day in advance or at minimum 15 minutes before the start of the call. A replay of the webcast can be accessed via the Events & Presentations page of the investor section of TELA Bio's website.

About TELA Bio, Inc.
TELA Bio, Inc. (NASDAQ: TELA) is a commercial-stage medical technology company focused on providing innovative technologies that optimize clinical outcomes by prioritizing the preservation and restoration of the patient's own anatomy. The Company is committed to providing surgeons with advanced, economically effective soft-tissue reconstruction solutions that leverage the patient's natural healing response while minimizing long-term exposure to permanent synthetic materials. For more information, visit www.telabio.com.

Caution Regarding Forward-Looking Statements

This press release contains forward-looking statements within the meaning of The Private Securities Litigation Reform Act of 1995. Words such as "may," "might," "will," "should," "believe," "expect," "anticipate," "estimate," "continue," "predict," "forecast," "project," "plan," "intend" or similar expressions, or statements regarding intent, belief, or current expectations are forward-looking statements and reflect the current beliefs of TELA's management. Such forward-looking statements include statements relating to our expected revenue and revenue growth for the full year 2022. These statements are not guarantees of future performance and are subject to certain risks, uncertainties and other factors that could cause actual results and events to differ materially and adversely from those indicated by such forward-looking statements including, among others: the impact to our business of the ongoing COVID-19 pandemic and the development of new variants of COVID-19, including but not limited to any impact on our ability to market our products, demand for our products due to deferral of procedures using our products, the labor and staffing environment in the healthcare industry, or disruption in our supply chain, our ability to achieve or sustain profitability, our ability to gain market acceptance for our products and to accurately forecast and meet customer demand, our ability to compete successfully, that data from earlier studies related to our products and interim data from ongoing studies may not be replicated in later studies or indicative of future data, that data obtained from clinical studies using our product may not be indicative of outcomes in other surgical settings, our ability to enhance our product offerings, development and manufacturing problems, capacity constraints or delays in production of our products, maintenance of coverage and adequate reimbursement for procedures using our products, product defects or failures. These risks and uncertainties are described more fully in the "Risk Factors" section and elsewhere in our filings with the Securities and Exchange Commission and available at www.sec.gov, including in our Annual Report on Form 10-K and Quarterly Reports on Form 10-Q. Any forward-looking statements that we make in this announcement speak only as of the date of this press release, and TELA assumes no obligation to update forward-looking statements whether as a result of new information, future events or otherwise after the date of this press release, except as required under applicable law.

Investor Contact
Greg Chodaczek
332-895-3230
ir@telabio.com   

TELA Bio, Inc.
Consolidated Balance Sheets
(In thousands, except share and per share amounts)
(Unaudited)

  June 30,  December 31, 
  2022  2021 
Assets      
Current assets:      
Cash and cash equivalents $27,725  $43,931 
Accounts receivable, net  5,306   4,234 
Inventory  10,291   7,658 
Prepaid expenses and other assets  2,312   3,232 
Total current assets  45,634   59,055 
Property and equipment, net  1,706   1,186 
Intangible assets, net  2,689   2,303 
Right-of-use assets  1,304    
Total assets $51,333  $62,544 
       
Liabilities and stockholders’ (deficit) equity      
Current liabilities:      
Accounts payable $2,246  $2,414 
Accrued expenses and other current liabilities  9,680   8,161 
Total current liabilities  11,926   10,575 
Long‑term debt  39,617    
Long‑term debt with related party     31,491 
Other long‑term liabilities  1,332   380 
Total liabilities  52,875   42,446 
       
Stockholders’ equity (deficit):      
Preferred stock; $0.001 par value: 10,000,000 shares authorized; no shares issued and outstanding      
Common stock; $0.001 par value: 200,000,000 shares authorized; 14,557,560 and 14,529,606 shares issued and 14,557,560 and 14,529,577 shares outstanding at June 30, 2022 and December 31, 2021, respectively  15   15 
Additional paid-in capital  251,846   250,064 
Accumulated other comprehensive income (loss)  129   (52)
Accumulated deficit  (253,532)  (229,929)
Total stockholders’ (deficit) equity  (1,542)  20,098 
Total liabilities and stockholders’ (deficit) equity $51,333  $62,544 
         

TELA Bio, Inc.
Consolidated Statements of Operations and Comprehensive Loss
(In thousands, except share and per share amounts)
(Unaudited)

  Three months ended June 30,  Six months ended June 30, 
  2022     2021     2022     2021 
Revenue $10,406  $7,558  $18,637  $13,435 
Cost of revenue (excluding amortization of intangible assets)  3,318   2,395   6,474   4,731 
Amortization of intangible assets  538   76   614   152 
Gross profit  6,550   5,087   11,549   8,552 
Operating expenses:                
Sales and marketing  11,055   7,502   20,433   13,801 
General and administrative  3,630   2,966   7,088   5,722 
Research and development  2,102   1,930   4,109   3,609 
Total operating expenses  16,787   12,398   31,630   23,132 
Loss from operations  (10,237)  (7,311)  (20,081)  (14,580)
Other expense:                
Interest expense  (934)  (864)  (1,845)  (1,753)
Loss on extinguishment of debt  (1,228)     (1,228)   
Other expense  (342)  (80)  (449)  (58)
Total other expense  (2,504)  (944)  (3,522)  (1,811)
Net loss $(12,741) $(8,255) $(23,603) $(16,391)
Net loss per common share, basic and diluted $(0.88) $(0.57) $(1.62) $(1.13)
Weighted average common shares outstanding, basic and diluted  14,557,453   14,458,911   14,548,210   14,448,715 
Comprehensive loss:                
Net loss $(12,741) $(8,255) $(23,603) $(16,391)
Foreign currency translation adjustment  134   1   181   (10)
Comprehensive loss $(12,607) $(8,254) $(23,422) $(16,401)
                 


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