TELA Bio, Inc. (NASDAQ:TELA) Q4 2022 Earnings Call Transcript

So there’s no reason to believe why that can’t be the case in the next three to six months with Premier and this new contract. Now what’s really great as well, and I’m going to announce it for the first time on this call, it’s a big deal that HealthTrust has renewed with us for four years. Not three years like the first contract, but four years. So they’re pretty pleased with the way we’ve handled ourselves, the way we’ve executed and the performance of our product, I would say, and so that’s very good. So we have three solid national scale contracts in place. I think that’s a robust footprint that can handle all the five-factor expansion plans that we’ve gone over here today, and the sales force expansion that Roberto and I have talked about.

I think that this footprint is big enough that it should allow us to have durable and consistent growth over the next two to three years, and it should be much less friction in the system than the way we’ve been doing it up till now. So you’ll recall, at 36% HealthTrust in Q3, the balance of that were in IDN that did not roll up to a contracted GPO. So that is a much higher friction process, finding a surgeon champion, value analysis committees, et cetera. We are equipped to do it, and we will continue to do it in addition as a sidecar alongside the GPO contracts. So we actually have four contracting and execution plays to help drive growth here, and that’s going to continue as we go forward.

Kyle Rose: Great. That’s very helpful, and congrats on the renewal of HealthTrust there. Maybe just a little bit more on the GPO side. Can you just confirm when you’re signing these agreements, do they include both OviTex and PRS? And just maybe the overall uptake or if there is a difference in uptake that you’re seeing in the hernia versus the breast recon side?

Tony Koblish: Yes, they include both. The category is for reinforcement meshes basically, and it’s focused on the category of products that includes both indications and both products. So, I think it depends, right? It depends on where the hospital is, right? The hospital isn’t just going to adopt our product without surgeons demanding the product. So if we have better relationships than a particular hospital on the plastic side, it may start with PRS and vice versa on the hernia side, right? It’s not like these hospitals automatically purchase the product. The first step after you get these contracts remains and always will remain to develop the surge in interest. And then once the surgeon realizes he’s on contract, then the supply chain says okay.

We’ll start to put this implementation process in place, which also can take time. It’s fairly bureaucratic, but it’s much easier than it is just on an IDN without a GPO contract. So, it depends on where the surgeon relationship is first, whether it’s on the hernia side or around the plastic and reconstructive side.

Kyle Rose: Okay. And then last question for me and then I’ll hop back in I know you’ve outlined your five-point plan. From my view, three of those are bigger than the others as far as being on the street, new products and new GPO opportunities. You already commented previously that guidance assumes no fundamental improvement in the backdrop, at least from a hospital staffing and throughput perspective. So I guess, how do we think about the drivers of GPO new products and new headcount? Where is the biggest impact from a metric perspective that we should be seeing this year?