TELA Bio (TELA) Q2 FY26 earnings call: guidance and Q&A

Update on sales team headcount and ramp time; is PRS customer concentration still an issue, and how does it relate to the sales force focus shift?

The company is on pace with hiring, and newer cohorts are outperforming. The productivity ramp time for reps is now 9-12 months, longer than the prior 6 months. The PRS pilot caused confusion and was stopped, reverting to a full-portfolio sales structure. PRS concentration is still real, with a small cohort of surgeons driving revenue, some of whom were out in H1. Efforts are underway to diversify the implanter base.

“We know tenure in our field force is the biggest indication of sustainable success for us. So we're really looking at that nine to 12 month ramp for reps to get up to a really strong productivity level.”

asked by Kaitlyn Roberts · answered by Unknown Speaker

Characterize fair vs. unfair competitive accounts and priorities to overcome barriers. Where will cost reductions come from in H2?

In fair accounts, like a buying group in the southeast, full product rollouts and surgeon engagement lead to success. In unfair situations, competitors threaten price increases, forcing TELA Bio out. This dynamic felt more ramped up in Q2. Cost reduction plans are still being finalized but will protect top-line growth and critical patient safety functions.

“So, Frank, we're still working on this. I've spent some time with the team and it's evident that there's opportunity to take some meaningful costs out, but the specifics of the plan have not been yet finalized.”

asked by Frank Tocna · answered by Unknown Speaker

Will H2 revenue be better than H1? What is the cash position, and how will the business be funded going forward given cost adjustments?

Management is optimistic for H2 revenue growth, driven by PRS recovery and focus on larger hernia pieces. The company ended Q2 with $30.4 million in cash. The cost structure review aims to extend the cash runway as much as possible, making additional fundraising a last resort.

“Our goal in that review of cost structure, in addition to preserving our revenue growth, will be to extend the cash rush runway as much as possible to make any sort of additional fundraising a last resort.”

asked by Matthew O'Brien · answered by Unknown Speaker

Clarify the primary drivers of PRS headwinds (pilot vs. surgeon changes) and their expected resolution. For hernia, will larger pieces offset the price-mix headwind from robotic procedures?

The PRS headwinds were due to both the pilot's confusion and key surgeon absences. The pilot has been stopped, and a top-performing rep has returned, already showing market improvement. Surgeons from competitors are also showing interest. For hernia, both trends are true: robotic cases are growing, but TELA Bio will focus on complex open procedures with OviTex, which drives higher ASPs and should normalize the revenue/unit growth gap by 2027.

“What's also true, and we referenced our data points throughout the call, the Obatex hernia portfolio has the best matchup for the most complex patient that's out there.”

asked by Michael Sarkon · answered by Unknown Speaker

Given OviTex's superior recurrence rates, how does TELA Bio combat competitive bundling and contracting, especially with an ongoing lawsuit?

Surgeons are increasingly recognizing OviTex's superior data through peer networks and publications, especially in complex cases where they advocate for the product. TELA Bio is upgrading its market access team to better engage hospital administration with economic value stories. This top-down and bottom-up approach aims to overcome the friction caused by structural barriers and competitive pressure.

“Having a relationship there and team members who understand what they value, being able to tell an economic value story derived from our clinical outcomes is critical to us.”

asked by David Caracolio · answered by Unknown Speaker