TELA Bio, Inc. (TELA) Bundle
Understanding TELA Bio, Inc. (TELA) Revenue Streams
Understanding TELA Bio, Inc.’s Revenue Streams
Revenue for the three months ended September 30, 2024, was $19.0 million, representing an increase of $3.9 million or 26% compared to $15.1 million for the same period in 2023. This growth was primarily driven by increased unit sales of products, which included the addition of new customers and growing international sales.
During the same period, the company sold 4,767 units of OviTex, a 39% increase from 3,426 units in the prior year. Additionally, OviTex PRS sales increased to 1,293 units from 896 units, marking a 44% rise in sales volume.
Year-over-Year Revenue Growth Rate
For the nine months ended September 30, 2024, revenue reached $51.7 million, up $10.2 million or 25% from $41.5 million in the same period of 2023. This increase was largely attributed to the expanded commercial organization and a rise in unit sales, despite a decrease in average selling prices due to a shift in product mix towards smaller-sized units.
Contribution of Different Business Segments to Overall Revenue
| Business Segment | Q3 2024 Revenue | Q3 2023 Revenue | Change ($) | Change (%) |
|---|---|---|---|---|
| OviTex | $X million | $X million | $X million | X% |
| OviTex PRS | $X million | $X million | $X million | X% |
| International Sales | $X million | $X million | $X million | X% |
Analysis of Significant Changes in Revenue Streams
In the nine months ended September 30, 2024, sales outside the U.S. totaled $7.5 million, compared to $4.2 million in the previous year. This reflects a growing international market presence.
Furthermore, the total cost of revenue (excluding amortization of intangible assets) for the three months ended September 30, 2024, was $6.0 million, up $1.4 million or 31% year-over-year from $4.6 million for the same period in 2023, indicating an increase in product purchases to meet the higher demand.
Gross profit for the three months ended September 30, 2024, was $12.9 million, with a gross margin of 68%, down from 69% in the previous year due to higher charges for excess and obsolete inventory.
This analysis highlights the growth trajectory and evolving revenue streams, underscoring the company's strategic focus on expanding its product offerings and market reach.
A Deep Dive into TELA Bio, Inc. (TELA) Profitability
A Deep Dive into TELA Bio, Inc.'s Profitability
Gross Profit: For the nine months ended September 30, 2024, the gross profit was $35.3 million, compared to $28.5 million for the same period in 2023, reflecting a 24% increase.
Gross Margin: The gross margin decreased to 68% for the nine months ended September 30, 2024, down from 69% for the same period in 2023.
Operating Profit: The loss from operations for the nine months ended September 30, 2024, was $25.8 million, a decrease from $31.8 million in the prior year, indicating an improvement of 19%.
Net Profit$28.6 million, compared to a net loss of $33.8 million for the same period in 2023, representing a 15% reduction in losses.
Profitability Ratios
| Metric | 2024 (9 months) | 2023 (9 months) | Change (%) |
|---|---|---|---|
| Gross Profit | $35.3 million | $28.5 million | +24% |
| Gross Margin | 68% | 69% | -1% |
| Loss from Operations | $25.8 million | $31.8 million | -19% |
| Net Loss | $28.6 million | $33.8 million | -15% |
Trends in Profitability Over Time
Sales and Marketing Expenses: Increased by $8.2 million, or 19%, to $50.7 million for the nine months ended September 30, 2024, from $42.5 million for the same period in 2023.
General and Administrative Expenses: Increased by $0.3 million, or 3%, to $11.1 million for the nine months ended September 30, 2024, from $10.8 million for the same period in 2023.
Comparison of Profitability Ratios with Industry Averages
Industry averages for gross margins in the medical device sector typically range from 60% to 80%. The company's gross margin of 68% is within this range but shows a slight decline year-over-year.
Analysis of Operational Efficiency
Cost Management: The increase in cost of revenue was $3.4 million, or 27%, primarily due to higher product purchases. The company reported a 31% increase in the cost of revenue for the three months ended September 30, 2024.
Gross Margin Trends: The gross margin trend indicates a decrease due to higher charges for excess and obsolete inventory.
Debt vs. Equity: How TELA Bio, Inc. (TELA) Finances Its Growth
Debt vs. Equity: How TELA Bio, Inc. Finances Its Growth
As of September 30, 2024, TELA Bio, Inc. reported total liabilities amounting to $59.3 million, which includes $40.97 million in long-term debt and $16.86 million in current liabilities.
The company's accumulated deficit stood at $349.5 million as of September 30, 2024, reflecting ongoing operating losses since inception. In comparison, as of December 31, 2023, the accumulated deficit was $320.9 million.
For the nine months ended September 30, 2024, TELA incurred an interest expense of $4.0 million, a slight increase from $3.9 million for the same period in 2023. The interest rate on the MidCap Credit Agreement, which governs the company’s long-term debt, is set at 6.25% plus the greater of one-month Term SOFR or 1.0%.
The debt-to-equity ratio, calculated based on total liabilities of $59.3 million and total stockholders' equity of $(6.27 million) (as of September 30, 2024), results in a ratio of approximately -9.45. This negative equity indicates that the company has more liabilities than assets, a situation typical for early-stage biotech firms that are heavily investing in growth and development.
In March 2024, TELA Bio entered into an asset purchase agreement with MiMedx Group, Inc. for the sale of certain assets related to NIVIS, resulting in a gain of $7.6 million. This transaction is part of the company’s strategy to manage its debt and improve cash flow.
Recent financing activities included an underwritten public offering in September 2024, where TELA Bio issued 14,670,000 shares of common stock at a price of $2.25 per share, raising gross proceeds of $46.0 million. This move reflects the company’s strategy to balance its reliance on debt with equity funding to support its operations and growth initiatives.
| Financial Metric | Amount |
|---|---|
| Total Liabilities | $59.3 million |
| Long-term Debt | $40.97 million |
| Current Liabilities | $16.86 million |
| Accumulated Deficit | $349.5 million |
| Interest Expense (9 months ended Sept 30, 2024) | $4.0 million |
| Debt-to-Equity Ratio | -9.45 |
| Gain on Sale of NIVIS | $7.6 million |
| Public Offering Gross Proceeds | $46.0 million |
Overall, TELA Bio, Inc. continues to navigate its financial landscape by balancing between debt financing and equity funding, aiming to support its growth while managing its liabilities effectively.
Assessing TELA Bio, Inc. (TELA) Liquidity
Assessing TELA Bio, Inc.'s Liquidity
Current Ratio: As of September 30, 2024, the current ratio was calculated at 2.04, indicating a healthy liquidity position. This is derived from current assets of $27.3 million and current liabilities of $13.4 million.
Quick Ratio: The quick ratio stood at 1.55 as of the same date, highlighting the company's ability to meet short-term obligations without relying on inventory sales.
Working Capital Trends
Working capital has shown a decline from $54.8 million at the end of 2023 to $27.3 million as of September 30, 2024. This change reflects a decrease in cash and cash equivalents from $46.7 million to $17.3 million over the same period.
| Period | Current Assets (in millions) | Current Liabilities (in millions) | Working Capital (in millions) | Cash and Cash Equivalents (in millions) |
|---|---|---|---|---|
| December 31, 2023 | $54.8 | $13.4 | $41.4 | $46.7 |
| September 30, 2024 | $27.3 | $13.4 | $13.9 | $17.3 |
Cash Flow Statements Overview
During the nine months ended September 30, 2024, the cash flow from operating activities was ($34.1 million), compared to ($29.8 million) in the same period of 2023. The increase in cash used was primarily due to higher net losses and changes in operating assets and liabilities.
Cash provided by investing activities was $4.6 million for the nine months ended September 30, 2024, primarily from the sale of a product line, offset by $0.7 million spent on property and equipment.
Cash provided by financing activities was $0.1 million in 2024, significantly lower than $46.2 million in 2023, which was primarily due to a major stock sale.
| Cash Flow Activity | 2024 (in thousands) | 2023 (in thousands) |
|---|---|---|
| Cash used in operating activities | ($34,064) | ($29,806) |
| Cash provided by investing activities | $4,641 | ($406) |
| Cash provided by financing activities | $149 | $46,245 |
Potential Liquidity Concerns or Strengths
As of September 30, 2024, the company reported an accumulated deficit of $349.5 million, which raises concerns regarding long-term liquidity. Despite having cash and cash equivalents of $17.3 million, the substantial operating losses indicate a need for ongoing capital management.
The company's existing credit agreement, with $40 million in borrowings outstanding, matures in May 2027, which provides some liquidity cushion but also highlights reliance on external funding sources.
Is TELA Bio, Inc. (TELA) Overvalued or Undervalued?
Valuation Analysis
As of September 30, 2024, the company's stock price was $2.25 following a public offering. The stock has experienced significant volatility, which is evident from its performance over the last 12 months.
Price-to-Earnings (P/E) Ratio
The P/E ratio is not directly applicable as the company reported a net loss of $28.6 million for the nine months ended September 30, 2024, resulting in a net loss per share of $1.16.
Price-to-Book (P/B) Ratio
As of September 30, 2024, the book value per share was calculated as follows:
- Total stockholders’ equity: $(6.272 million)
- Common shares outstanding: 24,717,193
- Book value per share: $(0.25)
The P/B ratio is therefore not applicable as the book value is negative.
Enterprise Value-to-EBITDA (EV/EBITDA) Ratio
The EBITDA for the nine months ended September 30, 2024, can be calculated as follows:
- Net loss: $(28.6 million)
- Add back interest expense: $4.007 million
- Add back depreciation: $0.461 million
- Add back amortization: $0.285 million
- Estimated EBITDA: $(24.847 million)
Given the negative EBITDA, the EV/EBITDA ratio is not applicable.
Stock Price Trends
Over the last 12 months, the stock price has fluctuated significantly, with a high of approximately $8.50 and a low of $1.50. The stock closed at $2.25 following a recent offering.
Dividend Yield and Payout Ratios
The company does not pay dividends, and therefore the dividend yield is 0%.
Analyst Consensus on Stock Valuation
Analysts currently have a consensus rating of Hold on the stock, reflecting concerns over the company's ongoing losses and market conditions.
| Metric | Value |
|---|---|
| Stock Price | $2.25 |
| P/E Ratio | N/A |
| P/B Ratio | N/A |
| EV/EBITDA Ratio | N/A |
| Net Loss (9 months) | $(28.6 million) |
| Book Value per Share | $(0.25) |
| Stock Price High (12 months) | $8.50 |
| Stock Price Low (12 months) | $1.50 |
| Dividend Yield | 0% |
| Analyst Consensus | Hold |
Key Risks Facing TELA Bio, Inc. (TELA)
Key Risks Facing TELA Bio, Inc.
Risk factors for TELA Bio, Inc. include a variety of internal and external challenges that may impact its financial health. This includes intense industry competition, regulatory changes, and fluctuating market conditions.
Industry Competition
The company operates in a competitive landscape within the medical device sector. As of September 30, 2024, TELA reported an accumulated deficit of $349.5 million, reflecting ongoing competitive pressures and the need for continuous product innovation to maintain market share.
Regulatory Changes
Changes in regulatory requirements can significantly impact product approval timelines and costs. TELA must navigate complex regulations imposed by healthcare authorities, which can delay new product launches and increase compliance costs.
Market Conditions
Market conditions can lead to volatility in product demand. The company reported a revenue increase of 25% for the nine months ended September 30, 2024, totaling $51.7 million compared to $41.5 million in the same period of 2023. However, this growth is vulnerable to economic downturns that could reduce healthcare spending.
Operational Risks
Operational risks include supply chain disruptions and reliance on third-party suppliers. The company has experienced fluctuations in inventory levels, with a recorded inventory of $13.6 million as of September 30, 2024. Any disruptions in the supply chain could impact production and sales.
Financial Risks
Financial risks are highlighted by the company's ongoing operating losses. For the nine months ended September 30, 2024, TELA reported a net loss of $28.6 million, a decrease from $33.8 million in the same period of 2023. This trend underscores the company's need for sustainable revenue generation strategies.
Strategic Risks
Strategic risks are linked to the company's ability to execute its business plan effectively. In March 2024, TELA sold its distribution rights for NIVIS for an initial $5.0 million payment, with potential future payments of up to $7.0 million. This strategic move reflects efforts to streamline operations and focus on core products.
Mitigation Strategies
To address these risks, TELA is implementing cost-cutting measures aimed at reducing operating expenses, which totaled $68.6 million for the nine months ended September 30, 2024. Additionally, the company has engaged in public offerings to raise capital, securing gross proceeds of $46.0 million from a recent offering.
| Risk Type | Description | Financial Impact |
|---|---|---|
| Industry Competition | Intense competition requiring innovation | Accumulated deficit of $349.5 million |
| Regulatory Changes | Complex healthcare regulations and compliance costs | Potential delays in product launches |
| Market Conditions | Volatility in product demand due to economic factors | Revenue increased 25% to $51.7 million |
| Operational Risks | Supply chain disruptions affecting production | Inventory levels at $13.6 million |
| Financial Risks | Ongoing operating losses | Net loss of $28.6 million |
| Strategic Risks | Need for effective execution of business strategies | Initial payment of $5.0 million from NIVIS sale |
| Mitigation Strategies | Cost-cutting measures and capital raising | Gross proceeds of $46.0 million from public offering |
Future Growth Prospects for TELA Bio, Inc. (TELA)
Future Growth Prospects for TELA Bio, Inc.
Analysis of Key Growth Drivers
Product innovations are a significant growth driver for the company. The sales of OviTex products increased by 39% in unit sales volume, from 3,426 units in Q3 2023 to 4,767 units in Q3 2024. Similarly, OviTex PRS sales rose by 44%, from 896 units to 1,293 units in the same period.
Future Revenue Growth Projections and Earnings Estimates
Revenue for the three months ended September 30, 2024, reached $19.0 million, marking a 26% increase from $15.1 million a year earlier. For the nine months ended September 30, 2024, revenue was $51.7 million, up 25% from $41.5 million in the same period of 2023.
Strategic Initiatives or Partnerships
The company has contracted with three national group purchasing organizations (GPOs) for their OviTex product lines, aiming to enhance hospital account penetration. Additionally, they are exploring strategic partnerships for product development and licensing agreements to complement their existing offerings.
Competitive Advantages
The company has a competitive edge through its proprietary training programs and customer engagement analytics, which aim to enhance sales force productivity. The ability to innovate and expand their product line positions the company favorably against competitors.
| Metrics | Q3 2024 | Q3 2023 | Change (%) |
|---|---|---|---|
| Revenue | $19.0 million | $15.1 million | 26% |
| OviTex Units Sold | 4,767 | 3,426 | 39% |
| OviTex PRS Units Sold | 1,293 | 896 | 44% |
| Nine-Month Revenue | $51.7 million | $41.5 million | 25% |
Research and Development Focus
Research and development expenses for the nine months ended September 30, 2024, were $6.8 million, a slight decrease from $6.9 million in the same period of 2023. The company is focusing on developing larger versions of the OviTex product and exploring lower-cost options targeting the same market segments.
Financial Health Overview
As of September 30, 2024, the company reported cash and cash equivalents of $17.3 million and working capital of $27.3 million. The accumulated deficit stood at $349.5 million.
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Updated on 16 Nov 2024
Resources:
- TELA Bio, Inc. (TELA) Financial Statements – Access the full quarterly financial statements for Q3 2024 to get an in-depth view of TELA Bio, Inc. (TELA)' financial performance, including balance sheets, income statements, and cash flow statements.
- SEC Filings – View TELA Bio, Inc. (TELA)' latest filings with the U.S. Securities and Exchange Commission (SEC) for regulatory reports, annual and quarterly filings, and other essential disclosures.