Q4 2023 TELA Bio Inc Earnings Call
Okay.
Yeah.
Speaker Change: Good afternoon, ladies and gentlemen, and welcome to the Tela Bio fourth quarter 2023 earnings conference call. At this time, all participants are in a listen only mode.
Speaker Change: <unk> and answer session will follow the formal presentation. As a reminder, this conference call is being recorded I would now like to turn the conference over to Melissa Smith from the Gilmartin group.
Louisa Smith: Thank you Michelle and good afternoon, everyone earlier today Tela bio.
Louisa Smith: <unk> financial results for the fourth quarter and full year 2023.
Louisa Smith: Copy of the press release is available on the company's website.
Louisa Smith: With me on today's call are Tony Co Bush, President and Chief Executive Officer, and Roberto Luca Chief Operating Officer, and Chief Financial Officer.
Louisa Smith: 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.
Louisa Smith: We encourage you to review the company's past and future filings with the SEC, including without limitation. The company's annual report on Form 10-K, and quarterly reports on form 10, Qs, which identify the specific factors that may cause actual results or events to differ materially from those described.
Louisa Smith: And these forward looking statements.
Louisa Smith: These factors may include without limitation statements regarding product development and pipeline opportunities products potential the impact of various macroeconomic conditions, including lingering effects of the COVID-19, pandemic recessionary concerns banking instability and inflationary pressures.
Louisa Smith: The regulatory environment.
Louisa Smith: And marketing strategies capital resources or operating performance.
Louisa Smith: With that I'll now turn the call over to Tony.
Tony: Thank you Luisa.
Tony: Good afternoon, everyone and thanks for joining us today for <unk> fourth quarter and full year 2023 earnings call today I'd like to cover two main topics.
Tony: How we did in the just completed quarter and year and how we've laid the foundation for even greater performance in 2024.
Tony: Our fourth quarter was very strong and I am delighted to report that we have never been better positioned for success in our history. As you will hear today as a result of our outstanding Q4, we entered 2024 with considerable momentum which is reflected in our guidance.
Tony: Quarter revenue was $17 million up 13% sequentially from the third quarter and 46% over the fourth quarter of 2022.
I will note that this is the 12th consecutive quarter, we've had at least 35% year over year topline growth with an average growth rate over those 12 quarters of 49% in.
Tony: In the fourth quarter, we sold more than 5000 pieces of Alphatec and <unk> Prs combined.
<unk> now accounts for approximately one third of our total revenue.
Tony: <unk> revenues grew 70% 75%.
Year over year versus 34% for the hernia products and we expect this pattern to continue given that Prs as the more recently launched product lines.
When we last spoke to you in November we described several initiatives, we have launched to increase sales growth productivity. After we experienced some disruption in the third quarter, specifically, we rolled out updated continuous training programs for our new reps more intensive training on overtaxed Prs for all reps and <unk>.
Tony: Senate programs targeted at those reps, who appear to be falling short of quota as well as those who are on track to surpass it.
Tony: We believe these programs are part of what helped us achieve record revenues in the fourth quarter. So we're going to continue the training and over quota incentive program, while adding a new incentive target targeting balanced selling across our product lines. As we've described to you in the past.
Tony: Alex that by both our hernia and Prs product tends to be more than twice as valuable as accounts that only buy one or the other product that.
Tony: Is one plus one doesn't equal two it comes to something more like three or four <unk>.
Tony: Leveraging the new Prs training, we've launched we're going to start incentivizing reps to sell both products, providing greater compensation to doses succeed in doing this we expect this initiative to be a real contributor to revenue growth in 2024 and beyond.
Tony: One big difference in 2024 from last year is that we are beginning of the year with essentially the full complement of reps. We expect to end the year with our goal last year was to grow to a field sales force of 75 to 80 reps and we achieved that and beyond expanding from 61 rep.
Tony: We exited 22022 with 286 reps and eight assistant reps at the end of 'twenty three.
Tony: As of the end of February we had 86 reps and assistant reps, we plan to remain at these levels throughout 2024, perhaps adding a few opportunistically with some of the assistance likely converting to full ramp over the course of the year. What this means is that the variability in our rep count is.
Tony: Likely to negatively affect sales in 2024 and from a productivity perspective more than 75% of our reps have been with us for.
Tony: For six months or more which remains the average for a rep to reach breakeven or the point, where they are covering their own variable costs.
Tony: We expect we will continue to see turnover in 2024.
Tony: Although at lower rates than in prior years, and with little expected negative impact our.
Tony: Our focus for the year, then is not on recruiting but on training and improving the productivity of the reps we have onboard playbook.
Playbook 90 remains the cornerstone into these effort supplemented with the additional more intensive training described earlier I am actually speaking to you today from our National sales meeting, where we have rolled out two significant new product offerings for our sales force to promote earlier today, we announced the full formal.
Tony: U S commercial launch of two liquid fixed product we have licensed exclusively from our partner advanced medical systems. These are the liquid fixed fixed date, laparoscopic and liquid liquid fixed precision open hernia mesh fixation devices. The first is indicated for minimally invasive femoral and inguinal hernia repair.
Tony: And for approximation of the peritoneum, while the second is indicated for open inguinal and femoral hernia repairs.
Tony: Both products have been available and successful in European markets for more than three years, we're really excited about the opportunity to bring liquid fixed to the U S. Because it is the only FDA approved PMA product that affected mesh and approximate tissue with liquid anchors, reducing the use of intrusive mechanical tack.
Tony: Futures or staples, the two liquid fixed products are designed to minimize the risk of mechanical tissue trauma. As we've often said we want to create a portfolio that drives growth increases awareness expand market share for product across our entire hernia franchise and demonstrates our commitment to improving all aspects of hernia.
Tony: Are we believe liquid fixed we will do just that by offering greater utility for surgical mesh and inguinal hernia repair by enabling mesh fixation to sensitive areas such as the triangle of Doom and the triangle of pain regions in the growing where other penetrating fixation methods could result in vascular.
Tony: Or nerve injury and chronic pain.
Tony: We also introduced our reps to Overtax IH are our new overtaxed inguinal hernia repair products and next generation soft tissue repair platform designed specifically for inguinal hernia repair just like our other <unk> devices overtime IH are uniquely utilizes layers of sheep room and <unk>.
Tony: Reinforce with just enough polymer suture for added strength and of course, all over tech devices are designed to leverage a patient's natural healing response facilitate tissue remodeling and optimize strength.
Tony: <unk> IHI, who will be available in three configurations.
Tony: Anatomically shapes and one rectangular all of which are specifically designed for inguinal hernia repair via robotic and laparoscopic approaches <unk>.
Tony: <unk> remains committed to the future of robotics, and minimally invasive surgery with over tax and we're taking many steps this year to advance the recognition of our products as the first choice for minimally invasive hernia repair we expect to formally launch over tech IH are in the U S. In the second quarter of 2024 I also wanted to.
Tony: Elaborate on our announcement yesterday of the sale of our $8 million to $12 million in total cash consideration of our distribution rights to our <unk> regular college and pack a wound care product co developed and designed to tell us specifications with regenerative biosciences.
Tony: <unk> represents an innovative high quality wound healing products and we expect it to perform even better as part of our portfolio of its acquirer as part of the consideration we received $5 million upfront and we retain an interest in seeing that it succeed in the form of additional future payments totaling between $3 7 million.
Tony: <unk>.
Based on net sales of notice over the next two years.
Tony: The cash contribution from this divestiture strengthens our financial position and puts us on an even more solid path to profitability.
Tony: I'll now turn the call over to Roberto to review, our financial results and 2020 for outlook.
Roberto E. Cuca: Thanks, Tony.
Roberto E. Cuca: As Tony mentioned earlier revenue for the fourth quarter of 2023 increased 46% year over year to $17 million.
Roberto E. Cuca: And grew 41% for the year to $58 $5 million with <unk> growing 36% and <unk> Prs growing 51% for the year. These.
Roberto E. Cuca: These increases were primarily due to an increase in unit sales of our products and the continued expansion and expansion of our commercial organization.
Roberto E. Cuca: Each of these resulted an increased penetration of our existing customer accounts as well as the addition of new customers and growth in international sales.
Gross margin was 68% for the fourth quarter and 69% for the full year compared to 70% and 65% for the prior year periods respectively.
<unk> decreased in the fourth quarter of 2023 versus the fourth quarter of 2022 was primarily due to an increase in our excess and obsolete inventory adjustments incurred during that period for.
Roberto E. Cuca: For the full year, the gross margin improvement was driven by improved inventory management processes and lower amortization of intangible assets.
Roberto E. Cuca: Sales and marketing expense was $17 $2 million in the fourth quarter of 2023 compared to $11 6 million in the same period in 2022.
This increase was mainly due to higher salary benefit and commission cost as a result of the expansion of our commercialization organization higher travel and consulting expenses and additional employee related costs due to increased head count.
Roberto E. Cuca: As Tony mentioned earlier, we hired in the fourth quarter of 2023 to achieve steady state sales force size, we expect for 2024.
Roberto E. Cuca: The effect was to increase expense at the end of 2023, but once that normalizes over the first quarter of 2024, we expect sales and marketing expense to be relatively level for the rest of 2024.
Roberto E. Cuca: General and administrative expense was $4 $1 million compared to $3 2 million in the same period in 2022.
R&D expense was $2 7 million in the fourth quarters of both 2023 and 2022.
Roberto E. Cuca: Loss from operations was $12 $3 million in the fourth quarter of 2023 compared to $9 $4 million in the prior year period net loss was $12 $9 million in the fourth quarter of 2023 compared to $10 million in the same period in 2022.
Roberto E. Cuca: We ended 2023 with $46 $7 million in cash and cash equivalents. This does not include any of the $8 million to $12 million consideration for the sale of nervous distribution rights for the value of <unk> inventory, we sold as part of the transaction both of which occurred in the first quarter of this year.
Roberto E. Cuca: Note that in 2023, <unk> accounted for less than $300000 of pellets total revenue.
Roberto E. Cuca: Turning to the outlook for 2024, we anticipate revenues to be in the range of 74 million to $76 million.
Roberto E. Cuca: Lending growth of 27% to 30% over the full year of 2023.
Roberto E. Cuca: As we've said in the past, we expect operating loss and net loss to be less in 2024, then in 2023, even excluding the contribution from the divestiture of Nimbus Mauro.
Roberto E. Cuca: Moreover, we expect operating expenses to be reasonably steady over the course of the year notwithstanding some typical seasonality in expense and since we expect revenue to grow sequentially, both operating loss and net loss to decline directionally over the course of the year again, even excluding the contribution from the divestiture of nib.
Roberto E. Cuca: As we've said in the past, we believe that our cash and cash equivalents, even before the proceeds from the divestiture of <unk> are sufficient to fund us to profitability and the incremental $8 million to $12 million will only provide additional cushion to that.
Roberto E. Cuca: We have an exciting year ahead of us and I look forward to updating you over the course of it with.
Roberto E. Cuca: With that I'll hand, the call back to Tony for closing remarks. Thanks.
Tony: Thanks, Roberto and thank you everyone for your interest in Tela bio I'm proud of what our team accomplished in 2023, we've made exceptional progress in expanding awareness around the overtaxed and <unk> Prs portfolio and the efficacy of our mesh and optimizing clinical outcomes and soft tissue preservation.
Tony: Throughout 2023, we dedicated resources to introduce more than 10000 specialized hernia and plastic reconstructive surgeons at 72 industry and society meeting to our brand and product portfolio and we educated more than 1500 surgeons globally through Tela bio lab and other educational program offerings.
Tony: The safe and effective use of our products one of <unk> key Differentiators is the compatibility of our reinforced biologic products with hernia procedures performed Robotically and Laparoscopically and 2024, we plan to continue educating the market with a particular emphasis on the use of alphatec and minimally invasive robotic.
Tony: <unk> cases as part of that initiative, we are excited for talent to be part of the upcoming intuitive surgical connect meeting next month.
Tony: In closing our team is poised to deliver another strong year of financial performance and solid execution I would like to thank all those at Tesla for their part in making 2023, such a success and setting us up for continued outstanding work in 'twenty four.
Tony: With that I'll now ask Michelle to open the line for your questions.
Michelle: Thank you to ask a question. Please press star one on your telephone and wait for your name to be announced Chill withdraw. Your question. Please press star one again, we ask that you. Please limit yourself to one question and one follow up one moment, while we compile our Q&A roster.
Michelle: And our first question is going to come from the line of Frank <unk>.
Frank: Then with Lake Street capital markets. Your line is open. Please go ahead.
Frank: Alright, Thanks for taking my questions. Congrats on a really strong finish to the year I was hoping to start with one on the 2024 guidance. Obviously your you had a strong start and a strong end of the year and typical med tech seasonality supports that how should we be thinking about Q1, obviously, where a good portion of the way through that and then the ramp up.
Frank: Revenues to achieve the guided range throughout 2024.
Speaker Change: Sure. Thanks for the question Frank So we expect that the seasonality we see.
Speaker Change: Now that we've seen in previous years is likely to replicate in 2024. So that means that the first quarter is typically flat to slightly down ish from the preceding fourth quarter and then the quarters succeeding in the first quarter, our ROE from that with the step up from the first and second quarter typically being one of the larger incrementals.
Speaker Change: That's in the year.
Speaker Change: We've talked about some of the factors that drive the very strong fourth quarter and then our <unk>.
Speaker Change: Actually pulling some revenue from the first quarter into the fourth quarter and past those are a couple of things. One is a lot of patients like use of HSA as at the end of the year.
Speaker Change: Co pays for surgeries, we understand that patients some patients with scheduled surgeries around the holidays as they have family at home to look after them.
Speaker Change: And then both physicians and sales reps are trying to make numbers to the end of the year. So that typically pushed it produces a bit of a push at the end of the year.
Speaker Change: So we do.
Notwithstanding the leveling off of our sales force.
Speaker Change: That sort of seasonality to persist.
And I'll, just add a little bit of color frame additional to what Roberto said I don't think Q1 is going to behave much differently than the normal seasonality patterns that refer to suggest it.
Speaker Change: But by US building out the sales force to the desired size in Q4 and getting the time in tenure and maturity on them.
Speaker Change: We're really setting up for that Q2 and beyond.
Speaker Change: As generally a great step up for us so.
Speaker Change: That's a little bit behind the thinking.
Speaker Change: Okay. That's helpful. And then let me go to SaaS, one more and then hop back in queue clearly a lot of conversation about robotic inguinal IH or I'm, assuming is going after that market.
A lot of volume there.
Speaker Change: On the England space, maybe just kind of recap that whole topic of positioning yourself correctly in the robotic tailwind as well as the volumes in England, all the opportunity there IHS specifically in the.
Speaker Change: The excitement around that area and how we should be thinking about that throughout the year.
Speaker Change: Sure Frank So we've got about four or five years of experience in the England.
Speaker Change: Space, but it's a little bit.
Speaker Change: Not optimized but it was a very ideal period of time to learn and.
Frank: To make sure that we baked in our product portfolio design.
Frank: Technique design and pricing scheme to work. So it gave us great Testbed, we started off with template.
Frank: The surgeon could trace out the unique shapes.
Frank: We developed various rolling techniques to get it down on the intuitive trocar.
Frank: And then various techniques from there and we had some success.
Frank: But we were using the basic product portfolio that is more applicable to the eventual stays so the pricing is a little bit misaligned. So.
Frank: While we've been able to do is take all the learning from that template program and just basic right into the product. We've made the product thinner we've added a little bit more polymer we've gone from a grip grip grip shaped pattern to a triaxial pattern, which I think is ideal.
Frank: For deployment, maybe a little stickiness inside the body and superb for strength given that the product is a little bit thinner.
Frank: We've been able to maintain a similar strength to other products and finally, we're taking all of those technique learning and we are adjusting the price for this.
Frank: Products to be Super competitive.
Frank: And what I will call the premium segment of the inguinal market and so.
Frank: As we've mentioned in the in the script.
We will have this product on the shelf at some point in.
In April or Q2, and we expect to roll it out with the sales force. After all this learning that's taken place over the years and we're really pleased.
Frank: To expose our company to this our.
Frank: Our sales team for this product at the National sales meeting today, So we're getting a great head start.
On the launch.
Speaker Change: Perfect that's great color I'll stop there congrats on the progress.
Frank: Thanks Frank.
Speaker Change: Thank you and one moment as we move on to our next question.
Speaker Change: And our next question is going to come from the line of Caitlin Cronan with Canaccord Genuity. Your line is open. Please go ahead.
Caitlin Cronan: Hi, everyone. Thanks for taking my questions and congrats on an awesome quarter.
Caitlin Cronan: Just to start crude quach on GPO contracts and how you are ramping in your existing contracts.
Speaker Change: You were a little blurry there katelyn were sitting in a hotel room with a land line, which is now ancient technology. So if you could just repeat that that would be great.
Katelyn: Sure Yeah, no worries it was just on GPO contracting and how you're ramping in your existing contract.
Katelyn: Yes.
Katelyn: Thank you yeah, so we're about 60% revenue.
Katelyn: Within our GPO partners.
Katelyn: Our target for this year is to be around 70%, we think thats very very attainable.
Katelyn: And if you look at the longest tenured GPO healthtrust and particularly the subset of health trusts known as HCA, we may have about 30% to 35% market share.
Katelyn: That organization within hernia, so I think given time.
Katelyn: Pressure edition of clinical data maturity of our commercial structure and team.
Katelyn: That we're slowly proving that we can penetrate into GPO over the long haul obviously, we've had the longest start with HCA in upfront, but we should be able to continue that march through the other GPO.
Katelyn: We are in the process of working through contracting for.
Katelyn: To get to get access to that product and then also other GPO or they're going to be coming up for contract late this year. So in addition to focusing mostly this year on implementation and growth within the footprint. We have we also keep our eye on the further.
Katelyn: <unk> is involved in getting more contracts, but we're very confident that.
Katelyn: Not only will the number of contracts grow, but our penetration will grow as well.
Speaker Change: Awesome and then just on liquefaction.
Speaker Change: Current indication is for polypropylene in classroom Nash will you be pursuing in indications, where new switch based mesh.
Speaker Change: Oh, absolutely, yes, very very good.
Speaker Change: Good reading defined print on that one. Thank you, yes, so whats powerful about liquid effect is that it is hyper aligned within went off to start and.
Speaker Change: It's very much a product that is going to be used with the vast majority of the England. All meshes used today that is to say polypropylene and polyester. So it is going to give us.
The ability to interact with surgeons, who do not use our product today, and it's going to give us a tremendous entry point and platform to present, our our new IHI our portfolio.
Speaker Change: Our new.
Speaker Change: Our whole hernia portfolio really.
Speaker Change: So I think it's going to be a very important driver of the hernia franchise for this year and then as the contracting et cetera starts to come into play.
Speaker Change: This year goes forward and through next year, I think liquids itself will start to become.
Speaker Change: An excellent contributor in the business as well so there's a couple of things that have to happen that we have our eye on working with Ams has been a tremendous partner so far in the launch phase very very much participating with us in the rollout here at the National sales meeting.
Speaker Change: One is expanding indications here things like ventral hernia and two is expanding indications to our product and biologic products.
Speaker Change: In Europe liquid fixed has been used for several years as hundreds of thousands of procedures that are done with it it's very good learning curve and tips and barrels for us to tap into.
Speaker Change: There is a published paper one of the surgeons out of the UK. Mr. Wilson has done hundreds of cases with liquid fix in combination with all biologic products, including our products. So we know that it works. We just have to do the work to drive the expansion of indications and.
Speaker Change: And different products that said theres more than enough to work with with the liquid liquid fixed labor that we have now since most England, they're repaired with synthetic mesh.
Speaker Change: And it's a great door opener for us as well.
Speaker Change: Yeah.
Awesome. Thanks, so much for taking the questions.
Speaker Change: Thanks, Kevin.
Speaker Change: Thank you and one moment as we move on to our next question.
Speaker Change: Our next question is going to come from the line of Michael <unk>.
Michael Anthony Sarcone: Sarcone with Jefferies. Your line is open. Please go ahead.
Michael Anthony Sarcone: Good afternoon, and thanks for taking my question.
Michael Anthony Sarcone: Thank you.
Michael Anthony Sarcone:
Michael Anthony Sarcone: Just on the sales incentive programs.
Sarcone: You talked about how there are synergy excuse the background noise. When you can get a rep selling multiple more than one product into account I think you said it could be three to four or not.
Speaker Change: I was wondering if you can give us a little more color.
Speaker Change: And what proportion of the sales force today is kind of selling one product.
Speaker Change: Just two or just any kind of split salesforce.
Speaker Change: That could ultimately go over time.
Speaker Change: Okay.
Speaker Change: Thanks for the question Mike.
Speaker Change: So.
Speaker Change: Pretty much all of our sales reps they are selling some of each products.
Speaker Change: What I'd say is that the.
Speaker Change: Those who are selling close to balanced selling and what we're trying to achieve with the incentive program represent probably about a third of our sales force.
Speaker Change: So if we can move the other two thirds of the sales force to something closer we believe that that dynamic of the one plus one equaling three to four will benefit the whole portfolio.
Speaker Change: So we're not going to put in place incentives that require them to jump from selling let's say, 5% Prs are 5% hernia to 50 50 immediately but we're putting in a plan that will gradually grow them incentivize them to grow to a much more balanced selling something that we'll look more.
Speaker Change: Similar to the breakout breakdown between the two products across our portfolio.
Speaker Change: Got it that's helpful. Thank you and then just.
Speaker Change: Second question for me just on cash burn.
Speaker Change: Can you talk about how you expect cash burn.
Speaker Change: The trend through the year.
Speaker Change: Okay.
Speaker Change: Well in the same way that with reasonably level of Opex over the course of the year and increasing revenue.
Speaker Change: We should be seeing operating income actually operating loss and net loss decreased directionally over the course of the year, we expect cash burn to be doing the same thing there is a little bit of seasonality in how our cash expense.
Speaker Change: Building of inventory and payment of.
Speaker Change: Incentive compensation for example, but directionally cash burn should be decreasing somewhat similarly to the decrease in operating income.
Speaker Change: Our loss.
Speaker Change: Thank you.
Thanks.
Speaker Change: Thank you and one moment, while we move on to our next question.
Speaker Change: And our next question is going to come from the line of Dave <unk> with JMP Securities. Your line is open. Please go ahead.
Dave: Hey, good evening guys.
You bet.
Dave: The accounts.
Dave: Using both are twice as valuable I'm. Just curious are you able to give us an update on how many of those accounts you have now and maybe if you have a target for where you think that's going to go in 2024.
Sorry, you're breaking up at the beginning what kind of accounts, where you're asking about.
Speaker Change: Exactly how many are using both.
Speaker Change: Like momentum are twice as valuable and then where do you think that scaling this year if you could maybe.
Speaker Change: Throw out.
Yes.
Speaker Change: How that could progress.
Speaker Change: Yes so.
Speaker Change: Probably about 50% of accounts are using both products.
They may not be using them in the same proportion as we sell across our portfolio.
Speaker Change: There are some smaller hospitals that.
Speaker Change: Really don't do one kind of a procedure or another and so those are just never going to convert.
Speaker Change: The larger hospitals that typically do both hernia repair and reconstruction.
Speaker Change: We do have some of those that really so primarily our <unk>, primarily one product or the other which means we're just not getting to the physicians who are doing you've got a stored procedure. So to the extent that we can get our reps talking to and pitching to those physicians as well they just become more efficient. They can do all of their selling in one institution, rather than having to get in their car and drive across town.
Speaker Change: Which means that they can be more efficient and effective.
Speaker Change: So the goal is to get as many of those potential hospitals.
Speaker Change: That could show up.
Speaker Change: Excuse me by both kinds of products up and running and buying books and so at some point it will be closer to 80%, 90% of our accounts are buying fairly evenly across our portfolio.
Speaker Change: Great and then legal fix.
I was wondering if you might comment on ASP.
Margin profile I think I saw that.
Speaker Change: The applicator can deliver something like 40 anchors.
Speaker Change: Something like that per procedure, so I'm just curious.
Speaker Change: How that's going to how we should think about that as we look at.
Speaker Change: To this year and then beyond thank you.
Speaker Change: Sure. So we havent disclosed the price point, the exact price point, it's going to be similar to Packers and staplers.
Speaker Change: And the margin will be.
Speaker Change: At or better than that depending on the exact ASP that we're able to achieve the.
Speaker Change: The rest of our portfolio.
Speaker Change: Amit.
Speaker Change: These are smaller dollar items.
Speaker Change: They are really used to only a single one even though they have 40 deployments, they're only used a single one per patient in <unk>.
Speaker Change: 40 anchors.
Amit: So quite a bit for these sorts of applications.
Amit: Thank you.
Speaker Change: Thanks, Dave.
Speaker Change: Thank you and one moment as we move on to our next question.
Speaker Change: And our next question is going to come from the line of Matthew O'brien with Piper Sandler. Your line is open. Please go ahead.
Matthew O'brien: Hey, this is still on for Matt Thanks for squeezing us in here and taking our questions and congrats on the outstanding quarter on the Rep side of things can you provide any additional color on the way that I'd think about it as two different cohorts one dean.
Matthew O'brien: The cohort before the sales force disruption in the other being post that disruption can you give any color on the productivity of each group.
Matthew O'brien: Quickly the newer reps might near the productivity of the more tenured reps.
Matthew O'brien: And is double digit productivity gain the right way to think about the group as a whole here 2024.
Speaker Change: Yes so.
Speaker Change: So as I said in the prepared remarks about three quarters of our reps have been with us for more than six months. So those would be reps.
Speaker Change: Our reps that were preceding that disruption that occurred in the third quarter.
Speaker Change: So about.
Speaker Change: Quarter, then are with us for under six months or just about six months. What we're seeing is that they are trending towards the same productivity metric than we've seen in the past of achieving breakeven so covering their own expenses within that six months on average.
Speaker Change: And we expect that with the additional training that we're giving them with the.
Speaker Change: Greater breadth of our regional managers, now who manage fewer reps individually.
Speaker Change: But they will be able to.
Speaker Change: At least achieve the sorts of productivity curves that our reps have in the past.
Speaker Change: That's helpful and then any color on the pipeline of additional GPO that might be waiting in the wings might we see another one of those here in 2024 and is there anything like that contemplated in the guidance.
Speaker Change: Yes, I mean, the next big National scale, one is busy and.
Speaker Change: That's probably in end of this year or early next year kind of event given when the process starts.
Speaker Change: Is less critical for us given that it's at the lesser of compliant organization and that means that we're able to go the harder route in terms of value analysis committees and process et cetera, but we're able to get into the IBM that roll up to busy in for the most part.
Speaker Change: So right now we've got our hands full with the.
The three primary GPO, then all the smaller <unk>.
Speaker Change: And other contracts that we have but that would be the next national one we're working on some of the really tight.
Speaker Change: Regional ones like Kaiser and things like that I don't have a good feel.
Speaker Change: For when these are going to come.
Speaker Change: So far we've had excellent track record, we haven't really been rejected anywhere. So I think it's a matter of time.
Speaker Change: Going to be driven off of when the bid process starts.
Speaker Change: How long it takes them to process and award the contract and it started to contract.
Speaker Change: It's generally a long process. So like I said this is the year of implementation more than new contracts, we can keep the new contract machine going.
Speaker Change: I expect it to be end of this year or sometime early next year, where you start to see some additions.
Speaker Change: Okay.
Speaker Change: Okay.
Speaker Change: Thank you.
Speaker Change: And I'm showing no further questions at this time and I'd like to turn the conference back over to Tony <unk> for any further remarks.
Tony: Thank you Michelle and thank you to everybody for joining us and for your continued interest in Tela bio.
Speaker Change: Look forward to catching up with you next time and have a great rest of your afternoon.
Speaker Change: This concludes today's conference call. Thank you for participating you may now disconnect.
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Speaker Change: Good afternoon, ladies and gentlemen, and welcome to the Tela Bio first quarter 2023 earnings conference call. At this time, all participants are in a listen only mode.
Speaker Change: <unk> and answer session will follow the formal presentation. As a reminder, this conference call is being recorded I would now like to turn the conference over to Melissa Smith from the Gilmartin group.
Louisa Smith: Thank you Michelle and good afternoon, everyone earlier today <unk> released financial results for the fourth quarter and full year 2023, a copy of the press release is available on the company's website.
Louisa Smith: On today's call are Tony Cobalt, <unk>, President and Chief Executive Officer, and Roberto <unk>, Chief operating Officer, and Chief Financial Officer.
Louisa Smith: 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.
Louisa Smith: We encourage you to review the company's past and future filings with the SEC, including without limitation. The company's annual report on Form 10-K, and quarterly reports on form 10, Qs, which identify the specific factors that may cause actual results or events to differ materially from those <unk>.
Louisa Smith: Scribed in these forward looking statements.
Louisa Smith: Actors may include without limitation statements regarding product development and pipeline opportunities products potential the impact of various macroeconomic condition, including lingering effects of the COVID-19, pandemic recessionary concern banking instability and inflationary pressures.
Louisa Smith: Regulatory environment sales and marketing strategies capital resources or operating performance.
Louisa Smith: With that I'll now turn the call over to Tony.
Antony Koblish: Thank you Luisa and good afternoon.
Antony Koblish: Everyone and thanks for joining us today for <unk> fourth quarter and full year 2023 earnings call today I'd like to cover two main topics.