Q3 2022 TELA Bio Inc Earnings Call

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Okay.

Okay.

Good afternoon, ladies and gentlemen, and welcome to the Tela bio third quarter 2022 earnings conference call. At this time all participants are in a listen only mode. A question answer session will follow the formal presentation. As a reminder, this conference is being recorded.

I'd now like to teleconference over to Greg who the checks from the Gilmartin group. Please go ahead.

Thank you Felicia and good afternoon, everyone earlier today Tela bio released financial results for the third quarter of 2022, a copy of the press release is available on the company's website.

Joining me on today's call are Tony <unk>, President and Chief Executive Officer, Edinburgh, Brookdale Cooker, Chief operating officer, and Chief Financial Officer.

Before we begin I'd like to remind you that during this conference call. The company may make projections and forward looking statements regarding future events.

We encourage you to review the Companys past and future filings with the SEC, including without limitation, the company's 2021 Form 10-Q.

<unk> 10-K, and Form 10-Qs.

Which identify the specific factors that may cause actual results or events to differ materially from those described in these forward looking statements.

These factors may include without limitation statements regarding product development and pipeline opportunities product potential the impact of COVID-19.

Vitoria environment sales and marketing strategies capital resources or.

Our operating performance with that I will turn the call over to Tony.

Thank you Greg.

Good afternoon, everyone and thanks for joining us today for our third quarter 2022 earnings call.

I am pleased to report that <unk> had another strong quarterly performance.

Third quarter revenue was $11 2 million, a 46% increase from the same period in 2021.

While we are pleased to see further revenue growth I continue to believe we haven't seen the full potential of our products as hospitals are still contending with staffing shortages reduced operating hours are resulting and postpone surgeries and health care professionals, taking longer than usual vacations during the summer.

After having put them off last year due to COVID-19.

The good news is the magnitude of these headwinds continues to lessen which we believe will result in increased procedural volumes and further revenue growth in particular, the backlog of surgeries. We've described on past calls remains high showing substantial future market opportunity.

And notwithstanding headwinds affecting the entire industry, we continue to see <unk> gained market share each quarter.

Our success has been driven by our continued focus on the five factors driving our revenue and revenue growth.

These are group purchasing organization access.

<unk> clinical data sales force size.

Sales rep productivity and product portfolio expansion from internal R&D and business development.

By improving and even one of these factors we can grow revenues.

By enhancing multiple factors, we can achieve the sort of revenue growth, we're reporting today and by fostering all of them going forward, we can tap into even higher growth potential.

Let's take them one by one.

Our GPO access efforts are progressing very much on track as you know we already have an agreement in place with Healthtrust and that organization members are routinely account for approximately a third of our revenues.

October one was the day that our recently signed contract with Premier became effective.

Premier has the second largest group purchasing organization in the nation, representing over 225000 providers and 404400 hospitals.

We are pleased to see that premier has gotten off to a good start with sales to the organization's members already accounting for a noticeable portion of our revenues in October .

<unk> access is critical to our success as it allows physicians to use our products off the hospital supply of them shelf rather than having to go through the utilization Committee process.

To accelerate uptake and premier hospitals, we've established a compensation incentive premium for our sales force when selling product to the GPO members for the first six months of the contract. We believe this will increase the adoption rate and align the sales reps with our long term goal of significant penetration and premier facilities.

We are also continuing to pursue contracts with a range of additional GPO is to increase our footprint to cover all significant purchasers in the U S.

We have also been advancing another factor contributing to revenues in their growth clinical data. We have been pleased with the high quality outcomes data from recent studies and we believe these compelling results will enable us to continue capturing market share in September two <unk> studies were presented at the American Hernia Society meeting.

Demonstrating a lower occurrence rates in both ventral and inguinal hernia repair.

The 24 month Bravo study measured the clinical performance of over tax for primary and recurrent ventral hernias in an open and minimally invasive procedure study.

Patients experienced an impressively low recurrence rate of two 6% compared to the double digit recurrence rates are competitive products.

As seen in the recent publication of our 24 month Bravo data in the Annals of medicine and surgery.

We are committed to compiling additional data supporting our products.

And are progressing with the recruitment of Bravo, too, which will have a focus on robotic hernia repair.

Today, 40% of Overtaxed procedures are conducted with the use of our surgical robot in a minimally invasive setting the use of our surgical robot system and general surgery continues to grow and we believe overtaxed is well positioned to take advantage of this trend.

Moving on to our sales force as we noted in our last quarterly call. We reached 57 reps at the end of June and we are on track to finish 2022 with at least 60 sales reps. We are in the midst of our 2023 budget process and expect to deploy some of the proceeds of our August equity raise to firm.

We're growing our sales force, we will have more details on what that looks like during our fourth quarter call.

Rep productivity is also an essential component of our future expansion.

Latest metrics from our playbook 90 program continued to indicate that our newest reps are reaching breakeven within three to six months time.

We've had great success with this training process.

We are currently preparing additional selling materials based on our 24 month <unk> clinical data. We anticipate this will make the case for <unk>, even more persuasive and our rest communication with surgeons.

And finally, the fifth aspect of our strategy to create stakeholder value is growing our product portfolio.

We continue to evaluate product expansion through strategic collaborations partnerships or acquisitions and we are also advancing product development internally on our own and in collaboration with our contract manufacturer.

We want to leverage our accomplish salesforce by providing them with additional standout products with the same call point as <unk> and continued to build out our soft tissue preservation and restoration portfolio.

We expect to begin rolling out additional products in 2023, and we will have more to say on that at a later date.

With that I'll turn the call over to Roberto for more details on our third quarter financial results.

Thanks, Tony.

Revenue for the third quarter of 2022 increased 46% year over year to $11 2 million.

Growing 7% sequentially from the second quarter.

<unk> revenue, 29% year on year, and Prs more than doubled growing 108% year over year.

Gross profit percentage was 66% in the third quarter of 2022 compared to 60% in the same period last year.

The increase was primarily due to a lower provision for excess and obsolete inventory.

Sales and marketing expense was $11 2 million in the third quarter of 2022 compared to $6 9 million in the same period in 2021. This.

This increase was mainly due to higher salaries and benefits and commission costs as a result of the expansion of our commercialization activities higher travel and consulting expenses and additional employee related costs due to increased head count, particularly in our customer facing roles.

G&A expense was $3 $5 million in both the third quarters of 2022 and 2021.

R&D expense was $2 $1 million in the third quarter of 2022 compared to $1 4 million in the same period last year.

The increase was primarily due to higher salaries and benefits due to an increase in head count as well as increased consulting and study costs.

Loss from operations was $9 5 million in the third quarter of 2022 compared to $7 2 million in the prior year period.

Net loss was $10 $7 million in the third quarter of 2022 compared to $8 3 million in the same period. In 2021. We ended the third quarter of 2022 was $54 $2 million in cash and cash equivalents.

Finally for the full year 2022, we continue to expect revenue to range from $42 million to $45 million.

Representing growth of 43% to 53% over the prior year.

I'll now turn the call back to Tony for closing remarks, Tony.

Thanks Roberto.

No.

As you've just heard things continue to proceed. According to plan Tela bio has put in place and continues to expand and improve in each of the five factors driving our success and growth in a competitive medical device industry. We.

We have an exceptional product portfolio sold by a highly effective sales force, we offer our customers an excellent value proposition of functionality and price.

Our supply chain is strong and our products are backed by a substantial volume of published clinical data.

When combined this has a very powerful impact and is why we are consistently generating such strong results. The one area of improvement we heard that the investment community wanted us to address with our balance sheet.

To that end, we bolstered our cash position with an equity raise in August and are now well funded to further execute on our strategy.

Like to commend our teams ongoing tenacity in delivering strong performance. Despite the lingering challenges COVID-19 presents for our markets.

Looking forward, we will continue to focus on growing our five drivers of revenue and value growth.

Finally, I'd like to reiterate something we've said to investors before.

We are still in the early stages of a tremendous opportunity.

We estimate the market for our <unk> products is $2 2 billion, which leaves plenty of room for us to capture further share and drive significant future growth.

With that I'll now ask our operator to open the line for your questions.

Alicia Please go forward. Thank.

Thank you at this time, we will conduct a question and answer session. Please standby, while we compile the Q&A roster.

Yeah.

The first question comes from the line of Frank Koskinen from Lake Street Capital markets. Please go ahead.

Hey, Thanks for taking my questions. Congrats on the results and all the progress I wanted to start with one question following up on your comments Tony related to the Premier GPO, you said something along the lines of good start with sales accounting for a noticeable portion in October and the Premier contract, maybe just talk a little bit more.

About the early start to premier any anecdotal feedback you're hearing and a more pointed question. How long do you think it could take for premier to become a larger portion than healthtrust of total revenue.

Yeah. So.

The biggest most positive news thus far around premier.

He is not so much the dollars contributed in October .

As I've described to Premier accounts, we like those a lot, but the large systems that we're starting to get access to an approval.

There has been a very nice array of large systems that I think are going to be tremendously productive for us.

Over the next year so.

It takes time to move an organization as large as premier.

Three months is not going to be the measure as I think you are alluding to with your question.

There's a lot of setup work going on communication across all those 4400 hospitals thats a lot of people and coordination.

But it's working and we're starting to get those approvals in some of these big systems, and we really really like the future potential.

The other most important aspect.

Premier.

We are in the biosynthetic category, which puts us head to head with the leading resorbable synthetic material.

Which is likely over a $200 million business at this point.

Which means that we have graduated from the tough tough cases associated with biologics to a product that is being acknowledged by our Premier group purchasing organization that had utility across a wide array of procedures. So that's a big deal for us.

And all of that's going to work together.

<unk> forward.

I will remind you that the growth that we've achieved so far.

When we started off.

As a public company, we were less than $15 million in sales.

We've done that with one GPO contract and that contract has really been.

Difficult and impaired to execute against during the Covid period, but.

But we're still running about 36% of our revenue through Healthtrust and I think healthtrust is quite pleased with our execution and the way we conduct business.

We look forward to continuing that relationship for a very long time.

We are at the very early stages of attaining a level playing field around access.

We'll get another significant GPO fair.

Fairly soon in the next three to six months.

And I think that contract characteristic will also allow us to have wide access.

So I think they're all going to work together all these gpus will work together and.

And I hope, they're all very strong.

I am hoping that healthtrust grows.

And it's a race between the health Trust and Premier to see which one is bigger.

So that's sort of where my thought is on that.

I think we've got tremendous opportunity in those two there's another one coming.

And we look forward to maximizing the opportunity and potential in each one of those that's what our partners expect us to do because we offer significant clinical value and cost savings.

It's a partnership that works together.

Got it Okay. That's helpful and then maybe a bigger picture one on the competitive landscape.

Obviously, the fastest growing hernia mesh on the market right now, implying youre taking share from likely multiple players on the market, but I was curious if you have any feel for who you are taking the most share market share from in the hernia space.

Well, we're so underpenetrated in this big market and there are so many crosscurrents and shift happening between the categories.

Synthetic polypropylene mesh.

Resorbable plastic mash and generation one biologic mesh I would say generation one biologic Nash may be the biggest.

Shift, but we are definitely as we expand into a wider array of procedures.

We're starting to see the synthetic polypropylene shift starting to come our way.

Not quite as pronounced but it's starting we are in the early stages, there and then and that biosynthetic category I've got to say, we offer a significant value proposition.

Both clinical data and performance much better returns rates.

And a better economic value proposition.

So I think.

That's the next wave for us.

Is to get more competitive and take share in those plastic segments, both permanent and temporary.

Okay, and then maybe just one last one for Roberto can you maybe run through what's contemplated for the low end of the guide versus the high end of the guide.

Sure so.

As always there continues to be uncertainty not directly from the effects of COVID-19, but now from the second order effects.

So we're seeing a couple of dynamics.

That occurred in the third quarter that we wouldn't expect to see in the fourth quarter is that a lot of physicians and we confirm this anecdotally at a couple of our cadaver labs, a lot of physicians, who had not taken vacations last year because of Covid took more extended vacations. This year two to three week vacations, which reduced procedures.

We know that.

Nursing staffing.

<unk> to be a challenge.

There are a number of nurses who've exited the profession or taking a hiatus this.

And depending on when or if they come back that will affect how many procedures get done and then one thing we're seeing in hospitals is that to manage their expenses. Some hospitals are postponing surgeries that look like they might run into overtime.

And require additional payments to the nursing staff.

So that staffing pressure as well as something that could swing much from the bottom to the top of the.

The guidance range.

Not likely to be COVID-19 infections directly, but theres knock on effects and then I'd just add that in the southeast we're still seeing some challenge from the effects of Hurricane Maria.

Okay, that's great I'll stop there thanks for taking the questions and congrats again on all the progress.

Thanks, Brian .

Yeah.

Our next question comes from the line of Matthew O'brien of Piper Sandler. Please go home.

Hey, this is still on for Matt. Thanks for taking my questions and congrats on the quarter.

Guess just for starters, how is the market trending so far in Q4, and if you could provide color on how Q3 went annick.

Anecdotally, we've heard from other companies on that cobot vacation elongation. So was there a noticeable step up at the end of Q3, that's kind of trended forward here in Q4.

And are we still below the pre COVID-19 level of volume in that 80% to 85% range.

Yes, I'm going to start with that last piece first I believe we are still below.

We had some good conversations with <unk>.

General Surgeons, who have more of our executive management role with some health systems.

And they feel like they are still running at 85%, which means theyre not really eating into the backlog and so it may be a protracted rolling backlog right, they're going to have to get up to 115%.

On a regular basis for a long period of time to work the backlog down.

No I don't think.

That backlog at least in hernia has really been solved yet so the fact that we can grow so well with that is just excellent.

And we're well positioned as that rolling backlogs slowly resolves itself to B b.

To be very well situated.

Taking share and being in the right place at the right time with the.

The data that we have at a natural repair product in the face of all the headwinds around plastic.

Feels pretty good that we're in the right spot.

Sure and so as far as the cadence of Q3 and Q4 so.

July began fairly strong we saw some of that vacation effect more in August we got some bounce back in September .

With the caveat that at the end of September Hurricane Ian did affect to the south or southeast territory, which tends to be one of our more successful territories and we've seen some.

Drag on effects from that at the beginning of the fourth quarter.

Yes, I think overall the fourth quarter has started.

Stronger.

There is still these weird air pocket that you run into like we have discussed in the third quarter, but by and large.

Fourth quarter is usually strong and we don't anticipate that it should be any different this year given the <unk>.

Ups and downs of what we're contending with with these second order derivative knock on effects that reverted to describe those aren't going to go away they seem to they seem to rise up and then come down.

No.

Helpful. Thank you for that color and I guess just finally.

We're still on pace for 60 reps this year.

Got it.

Oh 15 reps added in 2022.

Looking ahead to 2023 and I can appreciate it if you don't quite have the color yet but are we are you expecting to add a similar amount of reps call. It 15 in 2023 or do you have any insight onto your expectations. Thank you.

Sure. So we are actually right in the middle of our budgeting process right now.

So we're building up all components of the P&L and obviously, taking particular attention to sales and marketing what I'd say is I'd be surprised if we didnt add any reps, but the exact quantum of them is still up in the air.

A lot more to say about that on our fourth quarter call, but one thing I will add to give you a little directional.

Colorado as to what our thinking is.

Our rep productivity metrics remain good three to six months.

And the asset is getting bigger and wider so we are very conscious of the fact that we want to take advantage of this access.

The GPO contracts come online.

Great. Thank you.

So we sure next question please.

Hello Apologies. Our next question comes from the line of Kyle Rose of Canaccord Genuity. Please go ahead.

Great. Thank you for taking the questions and apologies we've been bounced around a couple of calls here.

Wonder if you could talk about a little bit more about the sales rep productivity I think at the beginning you talked about the newer cohort had a breakeven earlier than expected so.

So congrats on that but maybe just where are they seeing the most success early or from the playbook is at on the traditional AMETEK side or.

On the Prs side of the business and then can you just confirm it the premier contract does that include both <unk> and <unk>.

Yes.

Yes, all of our contracts that we.

Our engaged with for all products, so thats excellent.

I would say, we've got a cohort of reps here that have been very strong on the hernia side.

And then we have a newer cohort of reps that are starting off very strong on the Prs side.

Youll recall that one of the things that we're really focused on and maybe this will be more of a next year metric is sell both products in one place one hospital.

Yes.

It's a non linear positive impact on the business, it's roughly a one plus one equals four.

Versus one plus one equals two.

That's likely a focus going forward, which is going to be nothing but aid in that rep productivity I think one of the learnings from this year just to not get too granular on color.

Is that it's probably best to bring our new cohorts new classes of reps on.

No.

Not during the summer months right. So things tend to slow down there maybe it's a good time to train them I think we have to we have to think through when we run the training classes I mean, we certainly like our Q1 training class.

We like in end of Q3 training class. So I think we're still.

Figuring that out, but we're very encouraged by the productivity metrics and it certainly.

Has the feel that we're in the early stages of that getting even better.

With the access that is now available to premier and future assets that we will generate through other contracts. So.

We will be monitoring this very closely.

There's nothing but upside I think in these productivity measures going forward.

Great and then when you talk about Prs broadly.

Where are you at from earlier.

Early adopters to middle adopters perspective, I realize it's still early here, but there's not a lot of data in the market for any of the competitive technologies. So just really wondering what youre running up against from a governor on some of the productivity from an upside perspective.

Well, we're three years behind right and the uptake and comparisons are hernia. So.

I think Prs is progressing very well.

In comparison to the progression in the early stages of the hernia business.

And.

I think it is going to do nothing but get stronger again, driven by the five factors right bigger sales force better access.

And there.

There were some interesting products.

We're looking at for the future that are going to hang around the Prs business, which I think will be very helpful.

<unk>.

And lastly, it it's really the clinical data aspects.

And we're collecting under.

FDA retrospective study a significant amount of Prs clinical data, we're doing it the right way.

So as that emerges I think that may be one of the last elements in the five factors that will help to propel prs going forward.

Otherwise for of the factors are in pretty good shape, allowing the Prs business, we're just a little bit earlier.

The progression so im going to say, we're very much still in the early adopter phase.

Okay, great well, thank you for taking the questions congrats on a good quarter.

Thanks Carl.

Our next question.

From.

Dave totally of J P M.

Hey, good evening.

Just to follow up on that productivity commentary.

I think in the first quarter, you gave us sort of a salesforce cascade with sort of.

Number of folks that are doing different levels of sales and I was wondering.

I don't know if you have that specific data in front of you but.

I guess, we should assume that you've got more people doing over 1 million more doing over $2 million any any thoughts there any color.

How it looks today.

Yesterday, we don't have that.

Data on US right now and we're trying to move away from it for a reason that we've discussed.

Occasionally so one of the ways that we increase productivity as well occasionally take and we're doing this more often now who occasionally take a stronger performing territory and subdivided.

Providing a portion of it to a new rep.

And holding the old graft.

Giving them an override so theyre not economically harmed for some period of time.

So the measure doesn't work quite as well.

Doing that going forward the one the $1 five in the two cut points, what I would say, though is that on a on unsub divided territory level.

Will.

We're continuing to see territories get larger we're continuing to see more than pass through those thresholds.

And the bottom end with our newer reps, we're continuing to see the reps climb through the ranks from the $5 million for the three quarter million to just under $1 million, even more quickly than we have in the past, yes, I'd say, we're pretty pleased with the progression.

If you look at that $1 million and $2 million.

Quantity, even with all of that.

Got it and then maybe.

Just a quick follow up Roberto can you just remind us the terms on the debt the right.

Maturity and then.

I know you've been building some inventory.

I was wondering if this sort of level that you have now is what you think is kind of in the normal level for you moving ahead, particularly as we're hopefully getting out of these COVID-19 headwinds forget.

Any comment there on sort of that sure that level. Thank you.

Sure. So let me start with the inventory. So we do expect that inventory going forward is going to grow more similar to the rate of rep.

<unk> revenues.

The past year, we had to do some inventory destocking to prepare for potential disruptions, particularly in Europe .

So now that we're at a bigger base of revenues.

<unk> inventory should grow more closely.

At the same rate as revenue does as.

As far as the debt facility goes.

The all in interest rates is something on the order of 9%.

Chopped up into a couple of different types of payments.

It's a interest only facility for three years, which can be extended to four years.

If we meet certain threshold, which we expect a pretty easily meet.

And then there is.

Amortization over the course of either the last two years or one year to that.

Fifth year.

Got it thank you.

Thanks, Dave.

Okay.

Our next question our next and final question comes from the line of Zack <unk> of Jefferies. Please go ahead.

Hey, guys. Congrats on another good quarter and thanks for taking the question.

I just wanted to touch on backlog again, you made a comment that.

Haven't seen much backlog or capture so curious if you could talk about how large that backlog is in.

How are you thinking about backlog recapture as we some of these headwinds start to ease up a bit.

Sure. So I'll start and then turning to jump in so the way we estimated the backlog was to take a look at the growth rate in hernia immediately before COVID-19.

Then measure the trend that out and then measure the variance from that trend in the actual hernia repairs we are seeing.

And then we check that with some physicians that we know including.

Some hospital administrators, who.

To confirm that on the order of 100000 cases sounds right.

Now if you think about the backlog is essentially an inventory youre going to get.

Patients coming out of the backlog and new patients going into the backlog and Tony's point was that if youre not doing procedures at the same rate as you were before the backlog was established youre doing them at a lower rate youre not going to be working down the backlog and it may even continue to grow so.

So what we have been seeing and hearing from physicians and hospitals is that the rate continues to be on the order of 85% of pre COVID-19 levels, which means that even though the same individual patients are not in the backlog.

It may have turned over the size of the backlog has not decreased substantially.

I don't have much to add to that okay.

Okay.

Very helpful and comprehensive I appreciate it.

I guess following up on that is is the backlog consist of mostly oss or prs the combination any color on that.

I would say, it's mostly at hernia Prs is a different animal it.

Connected to cancer surgery, So I think theres going to be a different approach there as we've commented on past calls.

The prs market tends to be much more resilient to COVID-19 disruptions because those.

Breast reconstruction surgeries are connected with messed activities associated with cancer surgeries.

Surgeries that you can't really delay.

And which had priority even during COVID-19, whereas.

Hernia cases can be delayed.

One observation we've heard from one of the hospital administrators, we talked to is that what they were seeing as the hernia cases that they were repairing looked like they were more serious the tiers had gotten larger as patients delayed them.

But you are able to delay them before until some point when they become a merger.

Got it that's helpful and then.

<unk>.

Quickly on Bravo to I know, you said youre starting to enrolling and can you just.

Here's some color on kind of what that or what.

He is going to look like and how we should think about the timelines there.

Absolutely so so.

So bravo to was significantly delayed by Covid.

Not a high priority on many hospitals list to do a post market clinical study when so much other stuff what's going on.

So I.

I think we're coming out of that were in the double digit enrollment now.

We have a whole.

Group of new sites that are coming onboard.

And I think we're starting to see it move.

So I don't know exactly.

When I can give any color on when enrollment will be complete I think we've got a we've got to see maybe a couple of more quarters of performance.

And how these new sites perform before we can do that so I don't think were in a position to do that right now.

But one thing I do want to emphasize is that we're looking at Bravo to mostly as a confirmatory study.

Its robotic in nature.

Right now 40% of our cases day in and day out are done robotic and another 20% are done laparoscopically for a total of 60% are done minimally invasive way.

There is a sub component of patients within Bravo, one which were done robotically. So that data is there and.

And then we've got well over a thousand patients in various registries single arm studies case series from a wide array of third James for a wide array of hernia types.

And those recurrence rates and clinical data signals are exactly what we're seeing with Bravo, one low low single digits.

So I think we've got enough proof source to show that we've got an excellent product portfolio for everything from the most complicated procedures to.

Most of them pulling robotic procedures.

So.

And we filled a lot of that data in during the Covid period. So we made good use of that time.

Bravo to we'll report out on it I think it's going to be a great study and I think it's going to be very confirmatory and we'll learn some interesting things, but I don't feel like it's holding us back right now.

Miss in robotic.

Procedure.

<unk>.

Thanks for that color just one more for me I will try.

Yes, I appreciate the color on an extended vacation.

During this summer certainly something that we've heard through others areas of Med Tech any way you could put some numbers around how much do you think that impacted growth in where we're <unk>.

Revenue could have been in the quarter had been more of a normalized.

Normalized quarter, thanks for taking the question yet.

Sure.

Thats, a pretty tricky wanted to to estimate because there are a couple of dynamics that are occurring at the same time.

So one of them is obviously the total number of procedures has been suppressed by staffing.

By that.

Desire hospital.

The void overtime.

So that gets you to that roughly 85% of prior prior procedure levels.

The challenges that thats not necessarily proportionally distributed the same way. So one of the things. We've been hearing is that hospitals have been prioritizing more lucrative surgeries, so knee replacement hip replacements.

At the expense of.

Yes, lucrative surgeries, which would include hernia repair.

Some of the dynamic may be the prioritization of those.

Again more lucrative surgeries over our surgeries and some of it may just be a reduction in the total number of procedures that are taking place because of vacations.

So that's a very long way of saying, it's really difficult for us to make an estimate of that.

We're pretty confident that that is one of the effects that's been contributing to the quarter.

We just can't come up with a number for how much that is.

At this time I would like to turn the call back over to Peter.

No additional comments.

Thank you Felicia.

And thank you for joining us this evening and thank you for your interest in Tela bio.

We are definitely in the early stages of ramping this business.

And I look very much forward to the continuation of our growth over the next 12 months to 24 months.

We're very excited the team here is very motivated.

And it's.

It's a great place to be inside this company right now so thank you.

Okay.

Thank you for your participation in today's conference. This does conclude the program you may now disconnect.

The conference will begin shortly to raise Johan during Q&A you can dial one one.

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