TELA Bio (NASDAQ:TELA) reported second-quarter 2026 revenue of $19.3 million, down 4% from $20.2 million a year earlier, as weakness in its OviTex plastic and reconstructive surgery, or PRS, portfolio outweighed growth in hernia unit volumes, international sales and LIQUIFIX.
The company also withdrew its prior full-year revenue guidance and said it plans to reduce its cost structure following lower-than-expected first-half results and a slower ramp in productivity among newer sales representatives. Heather Getz, who was appointed chief executive officer and director the week before the earnings call, said the company is evaluating a plan intended to preserve revenue-generating capabilities and patient-safety functions while extending its cash runway.
Leadership Transition and Commercial Challenges
Getz said the company’s portfolio addresses a $2.8 billion market opportunity across hernia and plastic and reconstructive surgery. She cited the BRAVO study, which she said showed a 2.6% recurrence rate for OviTex in complex tissue-repair procedures.
However, Getz said quarterly results did not reflect the portfolio’s potential. She identified three primary issues: a longer-than-expected onboarding and training period for new sales representatives; adjustments to the sales team’s PRS focus and incentives; and competitive contracting and bundling practices in hospitals. TELA Bio has filed a lawsuit against Becton, Dickinson and Company concerning what it describes as anti-competitive contracting and bundling.
President Jeff Blizard said the revenue shortfall was concentrated “almost entirely” in the OviTex PRS portfolio. In January, the company began a pilot program using dedicated PRS representatives at selected hospitals, intending to deepen clinical relationships and establish sustainable business in those facilities. Following feedback from sales leadership and the field, the company concluded that the pilot created confusion within the broader sales organization and contributed to the PRS decline.
TELA Bio ended the pilot and returned to its prior model, in which territory managers sell the company’s full product portfolio throughout their territories. Blizard said the company is rolling out PRS training for its U.S. field organization and is working to better use medical-office resources. Management said it expects PRS to recover in the second half, aided by the business’s seasonal pattern.
Management also said PRS revenue remains concentrated among a relatively small group of surgeons. Jim Hagen, senior vice president of strategic commercial operations and marketing, said several significant PRS users were unavailable during the first half, while some surgeons experienced career or personal-life changes. The company is seeking to diversify its implanter base to reduce exposure to such disruptions.
Hernia, International and LIQUIFIX Growth
Although PRS declined, TELA Bio said its core hernia business continued to gain procedural share. Global OviTex unit volume rose 12% year over year to 5,776 units, compared with 5,178 units in the prior-year quarter. OviTex revenue increased 6.6% to $13.3 million.
The difference between unit growth and dollar growth reflected an ongoing mix shift toward smaller, lower-priced products as more hernia procedures are performed robotically. Management said it is pursuing more complex abdominal-wall cases, which often require larger pieces and carry higher average selling prices. Hagen said the company expects the gap between revenue and unit-volume growth to begin normalizing into 2027.
International revenue rose 26% to $3.8 million, supported by deeper penetration in the United Kingdom and other European markets. Management noted that European growth currently comes entirely from the hernia portfolio because OviTex PRS remains in the regulatory process for the European market.
Other revenue, including LIQUIFIX, increased 39% to $500,000. Blizard described LIQUIFIX as another source of strong quarterly growth.
Financial Results and Cost Review
OviTex PRS revenue fell to $5.5 million from $7.3 million in the second quarter of 2025, reflecting a 23% decline in PRS unit volume.
- Gross profit: $13.9 million, compared with $14.1 million a year earlier.
- Gross margin: 72%, compared with 70% in the prior-year period, aided by refunds of previously paid tariffs and a lower excess-and-obsolete inventory charge as a percentage of revenue.
- Operating expenses: $23.2 million, unchanged from a year earlier.
- Operating loss: $9.3 million, compared with $9.1 million a year earlier and down 12% sequentially from the first quarter.
- Net loss: $11.3 million, compared with $9.9 million in the prior-year quarter.
- Cash and cash equivalents: $30.4 million at quarter-end.
Chief Operating Officer and Chief Financial Officer Roberto Cuca said the larger net loss was primarily driven by $2.1 million in interest expense related to the company’s upsized credit facility, compared with $1.2 million under its previous facility in the prior-year period.
Cuca said the company’s cost-reduction review is still in progress and that management will provide an update after the plan is finalized. He said TELA Bio’s objective is to extend its cash runway as much as possible and make additional fundraising “a last resort.”
Competitive Contracting Focus
Management said hospital contracting remains a significant obstacle in the U.S. hernia market. Blizard described a southeastern buying group that expanded TELA Bio’s presence across roughly 13 to 15 sites, allowing full product rollouts and surgeon engagement. By contrast, he said another health system asked TELA Bio to leave a program after a competitor threatened a pricing increase following TELA Bio’s share gains.
Getz, Blizard and Hagen said the company is responding by upgrading market-access and contracting talent, building relationships with hospital administrators and emphasizing clinical and economic evidence. Management said it also intends to continue developing surgeon advocates, particularly in complex cases where physicians may be more likely to push for access to OviTex.
About TELA Bio (NASDAQ:TELA)
TELA Bio, Inc (NASDAQ: TELA) is a commercial‐stage medical technology company headquartered in Malvern, Pennsylvania. The company is focused on developing, manufacturing and commercializing regenerative medicine and advanced soft tissue repair solutions. By integrating proprietary biomaterials and processing technologies, TELA Bio aims to offer products that support the body’s natural healing processes in wound closure, hernia repair, reconstructive surgery and other surgical specialties.
The company’s product portfolio includes acellular dermal matrices, hemostatic agents and tissue scaffold systems.
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