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    TELA
    Earnings call· Jun 2026(Q2 FY26)

    TELA Bio Q2 FY26 earnings call TELA

    Aug 10, 2026 Source

    Executive summary

    TELA Bio Q2 FY26 — Revenue Miss and Guidance Withdrawal Amidst Sales Force and Competitive Headwinds

    TELA Bio reported a revenue miss in Q2 FY26, primarily driven by underperformance in its OviTex PRS portfolio and longer-than-anticipated sales force productivity ramps. The company withdrew its full-year guidance and announced plans to reduce its cost structure, while maintaining optimism for a second-half recovery in PRS and continued international growth. Leadership changes were also highlighted, with a new CEO focused on operational excellence and financial transformation.

    Highlights

    4

    • International sales revenue increased 26% year-over-year to $3.8 million.

    • Global OviTex unit volume grew 12% year-over-year, with 5,776 units sold.

    • Liquifix revenue was up 39% over the prior year period, reaching $0.5 million.

    • Gross margin improved to 72% from 70% in Q2 2025, driven by tariff refunds and lower inventory charges.

    Concerns

    4

    • Total revenue decreased 4% year-over-year to $19.3 million, falling below expectations.

    • OviTex PRS revenue declined 23% to $5.5 million, due to a decrease in PRS unit volume.

    • Net loss increased to $11.3 million from $9.9 million in Q2 2025, primarily due to higher interest expense.

    • Full-year revenue guidance was withdrawn due to lower-than-expected H1 results and longer sales ramp times.

    Guidance & targets

    3
    CategoryTargetConfidence
    Full-year revenue guidance
    Withdrawn
    high materiality
    High
    Cost structure reduction
    Meaningfully reduce overall cost structure
    high materiality
    High
    PRS business recovery
    Recovery in the second half of the year
    medium materiality
    Medium

    Segment performance

    5
    SegmentRevenueYoYQoQMargin
    Total Company
    Revenue decreased compared to $20.2 million in Q2 2025, primarily driven by a decline in OVIT-X PRS unit volume and a shift to smaller, lower-priced hernia units, partially offset by international growth.
    		$19.3M-4%——
    International
    Represents a 26% increase over the prior year period, driven by deepening presence in the UK and other key European markets. Growth comes entirely from the hernia portfolio.
    		$3.8M26%——
    OviTex (Total)
    Revenue increased from $12.5 million in the prior year period, with unit volume growth indicating procedural share gains despite a shift towards smaller units in the US market.
    Unit volume: 5,776 unitsUnit volume growth YoY: 12%
    		$13.3M6.6%——
    OviTex PRS
    Revenue compared to $7.3 million in Q2 2025, reflecting a significant decline in unit volume due to sales force focus issues and surgeon availability.
    Unit volume decline: 23%
    		$5.5M-23%——
    Liquifix
    Strong quarter with significant revenue growth over the prior year period.
    		$0.5M39%——

    Operational metrics

    12
    Gross margin
    72%vs 70% in Q2 2025
    Q2 FY26

    The increase in gross margin was driven by specific financial and inventory management factors.

    Total operating expense
    $23.2Mflat to prior year
    Q2 FY26

    Operating expenses remained flat compared to the prior year period.

    Sales and marketing expense
    $16.4Mdecrease of ~$400K from prior year
    Q2 FY26

    Sales and marketing expenses saw a slight decrease due to commission changes.

    General and administrative cost
    $4.1Min line with prior year
    Q2 FY26

    G&A costs were consistent with the prior year period.

    Research and development expense
    $2.7Mincrease of ~$0.5M from Q2 2025
    Q2 FY26

    R&D expenses increased due to higher personnel and study-related costs.

    Loss from operations
    $9.3Mvs $9.1M in Q2 2025
    Q2 FY26

    Operating loss slightly widened year-over-year and sequentially declined 12% from Q1 2026.

    Net loss
    $11.3Mvs $9.9M in Q2 2025
    Q2 FY26

    The increase in net loss was primarily due to higher interest expense from the new upsized credit facility.

    Interest expense
    $2.1Mvs $1.2M in prior year
    Q2 FY26

    Interest expense increased significantly due to a new credit facility.

    Cash and cash equivalents
    $30.4M
    Q2 FY26

    Cash balance at the end of the second quarter.

    Sales rep productivity ramp time
    9-12 monthsvs prior 6 months
    Current

    The time for sales representatives to reach a strong productivity level has extended.

    OviTex recurrence rate
    2.6%
    Long-term data

    OviTex demonstrates low recurrence rates in complex surgical tissue repair procedures.

    Competitor hernia repair material recurrence rates
    10 times highervs OviTex
    Long-term data

    Other biologic and biosynthetic hernia repair materials consistently show significantly higher recurrence rates.

    Industry KPIs

    4
    MetricValueDetails
    Tariff impactRefund
    Pricing realized priceLower-priced
    Sales force commercial capacity build9-12 monthsmonths
    Indicated addressable patient population2.8 billionUSD

    Risks & headwinds

    6
    Sales force productivity ramp-upOngoing

    9-12 months to reach strong productivity, longer than prior 6 months

    Mitigation: Full training program for US field team, increased resources for training, focus on tenure and experience.

    Unintended consequences of PRS sales pilotQ2 FY26

    Caused confusion within the sales organization, contributed to PRS decline

    Mitigation: Pilot stopped, reverted to original sales structure where reps cover full portfolio.

    Anti-competitive contracting and bundlingOngoing

    Creates barriers to OVTEC adoption, particularly challenging in the last 18 months

    Mitigation: Upgraded talent in market access and contracting team, ongoing lawsuit against Beck and Dickinson, focusing on economic value proposition to hospital administrators.

    Shift to smaller, lower-priced hernia unitsOngoing

    Impacts OviTex revenue mix, contributes to lower ASPs

    Mitigation: Focus on larger pieces for complex ab wall repairs to drive higher ASPs, expanding IHR and LPR products for robotic procedures.

    Concentration of PRS customersH1 FY26

    Small cohort of surgeons make up a larger percentage of revenue; disproportionate impact from a few surgeons being out

    Mitigation: Diversifying infrastructure to protect from shocks, re-engaging key users, focusing on driving depth at hospitals with more implanters.

    Higher interest expenseOngoing

    $2.1 million in Q2 FY26 vs $1.2 million in Q2 FY25

    Mitigation: Reviewing cost structure to extend cash runway and make additional fundraising a last resort.

    What to watch in Q3 FY26

    5

    PRS business recovery

    H2 FY26
    Current23% decline in Q2 FY26
    TargetRecovery in H2 FY26

    Why it matters

    PRS underperformance was a primary driver of the Q2 revenue miss; recovery is crucial for overall revenue growth.

    With these positive changes in place and what we know about the seasonality of PRS, we expect to see recovery in the second half of the year.

    Q&A highlights

    5

    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

    2 min read6 chapters

    Detailed Narrative

    01

    Leadership Transition and Strategic Focus

    Heather Goetz was appointed as the new Chief Executive Officer, bringing a track record of driving operational excellence and financial transformations. The company acknowledges the contributions of former CEO Tony Kobles. The new leadership is focused on leveraging the differentiated product portfolio, accelerating commercial execution, and strengthening customer relationships to drive the next phase of growth.

    02

    Q2 Revenue Shortfall and PRS Challenges

    Revenue for Q2 FY26 was $19.3 million, a 4% decrease from Q2 FY25, primarily due to a shortfall in the OviTex PRS portfolio. OviTex PRS revenue declined 23% to $5.5 million. This was attributed to unintended consequences of a dedicated PRS rep pilot, longer-than-anticipated sales rep productivity, and continued anti-competitive contracting and bundling practices.

    03

    Sales Force Productivity and Structure Adjustments

    The company initiated a pilot program for dedicated PRS reps which caused confusion and contributed to the PRS decline. This pilot has been stopped, and the company is reverting to its original structure where every sales representative covers the full portfolio. Management noted that sales reps are now taking 9-12 months to reach strong productivity levels, longer than the previously noted 6 months, but newer cohorts are outperforming predecessors at the same tenure stage.

    04

    Core Hernia Business and International Growth

    The core hernia business continues to perform well, with global OviTex unit volumes growing 12% year-over-year. International business was a consistent growth driver, with revenue up 26% year-over-year, particularly in the UK and European markets. Liquifix also had a strong quarter, with revenue up 39%. The company aims to focus on larger hernia pieces to drive higher ASPs and offset the shift towards smaller units in robotic hernia repairs.

    05

    Cost Structure Review and Cash Position

    Following the lower-than-expected first-half results, the company announced plans to meaningfully reduce its overall cost structure. This initiative aims to align costs with top-line performance and extend the cash runway, with specifics still being finalized. TELA Bio ended Q2 FY26 with $30.4 million in cash and cash equivalents, with the goal of making additional fundraising a last resort.

    06

    Competitive Landscape and Bundling

    TELA Bio continues to face challenges from anti-competitive contracting and bundling practices by larger competitors, particularly impacting OviTex adoption. The company is addressing this by upgrading talent within its market access and contracting team to better articulate the economic value proposition of its products to hospital administrators. The ongoing lawsuit against Beck and Dickinson highlights this persistent issue.

    AI-generated summary of the company’s earnings call. Not investment advice.