TELA Bio's 2025 Q1 Earnings Call: Navigating Contradictions in Tariff Impact, Revenue Growth, and Sales Force Dynamics

Gross margin impact from tariffs, revenue growth expectations, sales force stability and hiring dynamics, tariff impact on gross margin are the key contradictions discussed in TELA Bio's latest 2025Q1 earnings call.



Revenue and Product Growth:
- TELA Bio reported $18.5 million in revenue for Q1 2025, representing a 12% increase over the prior year and 5% sequential growth.
- The growth was driven by strong demand for both OviTex and OviTex PRS Reinforced Tissue Matrix products, with revenue growth of approximately 15% and 2% respectively. The growth in the European business also contributed, with 17% growth over the first quarter of 2024.

Product Launch and Market Positioning:
- TELA Bio launched larger sizes of its OviTex PRS product, simplifying complex procedures and increasing surgeon efficiency, which is expected to further drive market traction.
- The company's clinical data and products are well-positioned to capitalize on the market shift away from permanent synthetic mesh and towards more natural repair products.

Operating Expenses and Financial Outlook:
- Sales and marketing expenses decreased to $16.6 million in Q1 2025 from $17.5 million in the prior-year period, primarily due to lower compensation costs and travel expenses.
- TELA Bio reaffirmed its 2025 revenue expectation of $85 million to $88 million, representing growth from 23% to 27% over full-year 2024, on the back of strong Q1 performance and confidence in the performance of the commercial organization.