Edited Transcript of TELA.OQ earnings conference call or presentation 12-Aug-20 8:30pm GMT

To that end, throughout the second quarter, our commercial team worked tirelessly to support our customers and patients, continuing to cultivate and make meaningful progress on our strong surgeon pipeline. We adjusted quickly and implemented 2 virtual sales solutions designed to educate surgeons about our product portfolio and clinical data. The first is a virtual version of our VIP tours. Whereas we previously brought surgeons to our facility here in Malvern to learn about our products and to discuss different use scenarios with our senior management and clinical team, we are now utilizing virtual solutions in an effort to achieve the same experience.

Our second virtual solution is for KOL seminars. This solution offers surgeons a platform to engage with KOLs, and importantly, discuss the growing clinical data and their case history using OviTex and OviTex PRS. I’m happy to report these settings have been broadly well received by the attending surgeons as well as with our KOLs and sales staff. Through the end of July, over 120 surgeons have attended our virtual VIP tours or our KOL webinars. Among surgeons who participated in the event in Q2, we have seen close to a 200% increase in average monthly revenue of our products. Due to the success of these solutions, we will continue to use these strategies moving forward and are excited to introduce branding of our virtual approach to customer engagement. It’s called TELA LIVE, leadership-initiated virtual engagement. We expect to continue to add to our suite of virtual programs and are actively exploring additional platforms to provide our customers with virtual support and case coverage as well, which we call virtual proctoring.

Our sales reps have done an excellent job providing continuous support to their surgeon and hospital customers. The hospital access environment continues to evolve throughout this pandemic and varies from hospital to hospital. Our sales team continues to adapt and comply with these various policies to mitigate disruptions and develop innovative solutions to meet customer needs and build their territories. While we are now generally seeing improved hospital access, our reps are flexible and remain ready to adjust as localized hotspots may arise within their regions.

On the clinical front, we recently announced the results of an interim analysis of our post-market BRAVO study. The analysis included patient outcomes at several time points, including the all-important 24-month follow-up period. At 90 days post-op, there were no recurrences, reoperations or implant removals among the 85 patients analyzed.

At 12 months, of the 57 patients that had been assessed, only one patient experiencing a recurrence. Notably, this recurrence stemmed in a location adjacent to the original repair in an area of abdominal weakness, and the initial repair using OviTex remained intact.

Of the 20 patients that reached 24-month follow-up, none experienced a recurrence or long-term complication. This interim analysis continues to clearly demonstrate the effectiveness of OviTex in improving patient outcomes in ventral hernia repair. These data have been submitted to a medical journal for publication, and additional analyses of these data have been submitted to upcoming medical conferences.

As a reminder, the BRAVO study is a post-market study designed by TELA Bio and its investigators to evaluate postoperative complications and reherniations following the use of OviTex in subjects with moderate to complex ventral hernias. Due to many hospitals limiting nonessential visits because of COVID-19, we are working very closely with our study locations to make sure all follow-up visits can occur in a timely manner as much as possible.

Turning next to our operations. During the first quarter call, we discussed several cash conservation strategies we initiated in April, including, among other things, a hiring freeze. On the heels of our successful capital raise in June and the lifting of hospital moratoriums on performing elective procedures, we are revisiting several of our capital conservation measures.

In late June, we began cautiously scaling up our sales force in territories where non-emergent procedures are being performed close to pre-COVID-19 levels and where we have hospital access through our existing IDN and GPO contracts. These new sales territories are being added within our existing 6 regions. So each region will consist of approximately 8 territories.

At a regional level, we are managing the business nimbly, employing both virtual and in-person strategies as appropriate given the local situation related to COVID-19. We continue to actively monitor the situation, make sure we move with our operational growth initiatives while judiciously managing our cash.

Regarding our GPO contracts, we are in communications with supply chain and clinical resources within hospital systems about the favorable efficacy and economics of OviTex when compared to other natural repair technologies. Supply chain functions at hospitals have come online in recent months to engage with suppliers, and we are focused on reinitiating discussions to drive our implementation strategy within contracted accounts. We also continue to make progress on securing additional IDN and GPO contracts. But time lines are variable as each organization manages its priorities relative to the pandemic.

We are continuing to stay in front of the decision-makers and support our business partners through this tough time, leveraging virtual solutions where possible, and we look forward to updating you on our progress in the months ahead.

Lastly, we continue to make progress in the plastic and reconstructive surgery market with OviTex PRS products. Following a limited commercial launch period where we solicited feedback from a core group of surgeons, we expanded our commercial launch in June. Our clinical development team has done an excellent job engaging plastic surgeons through our TELA LIVE program, and we expect to continue to broaden our surgeon base over the coming quarters. We also continue to work with plastic surgeons to identify opportunities to further refine and advance our OviTex PRS portfolio and playing a similar approach to our OviTex hernia portfolio expansion.

So now I’ll turn the call over to Nora.

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Nora E. Brennan, TELA Bio, Inc. – CFO [4]

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Thanks, Tony, and hello, everyone. Please refer to our press release issued earlier today for a summary of our financial results for the second quarter of 2020.

Revenue for the second quarter increased 6% year-over-year to $3.5 million. Though our revenue increased over the prior year period, it was impacted by lower-than-expected procedural volumes due to hospitals and patients deferring elective procedures due to COVID-19. Gross profit as a percentage of revenue improved in the second quarter compared to the prior year period, primarily due to a decrease in the charge recognized for excess and obsolete inventory as a percentage of revenue. Second quarter gross margin increased to 59% from 58% in the prior year period. Sales and marketing expenses were $4.1 million in the second quarter of 2020 compared to $3.9 million in the same period in 2019. The increase was due to higher salaries, benefits and commission costs as a result of our sales expansion activities. However, the increase was partially offset by the salary reductions, lower travel and consulting expenses resulting from the cost containment actions taken in Q2.

G&A expenses were $2.1 million in the second quarter of 2020 compared to $1.2 million in the same period in 2019. The increase was due primarily to increased costs associated with operating as a public company. R&D expenses were $1 million in the second quarter of 2020 compared to $1.1 million in the same period in 2019. This slight decrease was due to reduced outside development expenses and a lower level of laboratory spend. Loss from operations was $5.2 million in the second quarter of 2020 compared to $4.3 million in the prior year period. We ended the second quarter of 2020 with $85.5 million in cash. In late June, we successfully closed our underwritten public offering of 3 million shares, increasing our cash position by approximately $45 million. This additional capital will allow us to continue to build our team strategically, invest in clinical support and R&D and support our growth initiatives. Based on these plans, we believe that our existing cash resources will be sufficient to meet our capital requirements and fund our operations for the long term.

Now turning to 2020 guidance. Due to the continued uncertainties from the impact of COVID-19 on our business, we will continue the suspension of our full year 2020 guidance.

With that, I’ll turn the call over to Tony.

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Antony Koblish, TELA Bio, Inc. – Co-founder, President, CEO & Director [5]

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Thanks, Nora. In closing, I want to thank everyone again for your time this afternoon and for your interest in TELA Bio. I also want to thank our team for your continued energy, creativity and dedication to working as one to help patients and support our customers throughout these challenging times. I’m confident in the fundamental strength of our business, and I’m very optimistic that we will continue our success and achieve sustainable growth in the long term.

So I’ll now turn the meeting back over to the operator and queue up questions.

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Questions and Answers

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Operator [1]

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(Operator Instructions) Your first question comes from the line of Raj Denhoy from Jefferies.

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Rajbir Singh Denhoy, Jefferies LLC, Research Division – MD, Equity Research & Senior Equity Research Analyst [2]

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So I wonder if I could maybe ask a little bit about how the business ended in June and how it’s looked here now in July and part of the way through August. You gave that guidance for that — that update, I should say, kind of mid-June about you were tracking kind of, I think, 2 to 1 — $2.1 million to $2.3 million, ended up at $3.5 million. So obviously, a very sharp recovery in the back half of the quarter. But I’m curious how that’s sustained now as you’ve looked at July and August, has it continued to ramp? Or what are you really seeing on the ground now?

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Antony Koblish, TELA Bio, Inc. – Co-founder, President, CEO & Director [3]

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Yes. So keep in mind that our business is really quarterly as most med tech businesses are. So we can see, in perfect times without COVID, 40% to 45% of revenue come in for a quarter in that last month. So in Q2, April was so low, a little bit back in May. There’s a distortion of those ratios, right? So I would say that we came in a bit heavy at the very end of June, I would say, better than pre-COVID levels. And I’d say in July, we saw a continuation of that, but maybe a little bit of moderation based on the fact that we’re just starting the quarter out, I believe, Raj. So I don’t think we’ll really know if we’re seeing that acceleration until we get through the full quarter. But I can tell you that if you use pre-COVID measures, we were right there at that pre-COVID level, maybe a little bit better through July. So we were very happy with where July started almost relative to any other month we’ve had. But I just throw those caveats out there.

As we went through the month of July, I believe that was the first month where we saw these flare-ups in Texas and that kind of thing. So there was a little bit of undulation in territories. Overall, our business, if you just looked at the top line number, it was great. It was fine for July. But if you look at some of the underlying components that add into that, we did see some undulations and off a little bit by, I don’t know, 8% or so in Texas, Arizona, a little bit in Florida. So we’re treating this, I guess, philosophically, almost as rolling brownouts, right, that we’re just going to have to contend with. Not blackouts. I think those days are behind us for sure. So in a brownout, you’re not going to see elective procedures go to 0. You may see a slowdown, you may see a shift to other facilities, you may see all kinds of mitigating factors as hospitals fight and they will fight to keep the procedures going. So our goal here is to almost create our own reality where we operate aggressively, nimbly and agilely into whatever each territory has given us. So for example, if there’s a rolling brownout, bam, we go hit hard with TELA LIVE, we go virtual, we drive those programs, and we bank those new customers for the next couple of months. Where it’s open, we go hard, right? So I think I focused the team on that. Let’s control what we can control. And let’s just assume it’s going to be rolling brownouts as we go forward, off and on. Maybe sometimes week-to-week adjusting. Our goal is going to be to grow through that and optimize through that. So I feel pretty good that we’ve got a system in place and a team in place that can do all that. So that’s a long answer, but that’s a bunch of color too thrown in, Raj.

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Rajbir Singh Denhoy, Jefferies LLC, Research Division – MD, Equity Research & Senior Equity Research Analyst [4]

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That’s super helpful. And maybe just as a follow-up, and this may be a difficult question to answer as well. But when one thinks about what drives your growth, whether in this period, there’s some level of deferral catch-up versus underlying hernia demand, breast reconstruction as well, that sort of underlying demand, and then also now opening up new accounts or sort of competitive wins, is there any way you can maybe parse out what has been driving the recovery for you? Are there any one of those that’s maybe more important right now?

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Antony Koblish, TELA Bio, Inc. – Co-founder, President, CEO & Director [5]

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Well, like I said on our last earnings call, Raj, we have so many factors that have come together for us, right, whether it’s new products with PRS and LPR, whether it’s the new data, it’s the expanding sales force. And now I’m going to say this TELA LIVE program has been a really great weapon for us. So even if we look at Q2, right, we had only a handful of new territories. I think 35 versus 31 in Q1. But our new reps that we hired in 2020, and look, they’ve had no time in the field in the real world. They’ve been doing it all virtually. They contributed 11% roughly, well over 10% of revenue in Q2. So I think there’s a few things going on here. Was there a little bit of a pent-up demand in the second quarter? Probably. You probably could have spread a little bit of that June kick across April or May. But I think that gets overwhelmed by all the other factors that we have that — and we also have diversity of procedure as well, right? We’ve got an array of hernia procedures from complex to simple, touches different types of surgeons, and then we have the plastic and reconstructive, which touches a different type of surgeons. So there’s a diversity of opportunity, as I spoke about last quarter as well in terms of docs and procedures.

But like I said, we’re creating our own reality. We’re going to maximize all the assets that we’ve built and make this thing go no matter what’s handed to us. All we need is procedures somewhere, right? And I feel like we can make this thing happen.

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Operator [6]

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Your next question comes from the line of Matthew O’Brien from Piper Sandler.

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Matthew Oliver O’Brien, Piper Sandler & Co., Research Division – MD & Senior Research Analyst [7]

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Actually, I have a few, if that’s okay. Just for starters, Tony, I think you did $1.3 million in the last 2 weeks of June. Are you saying you did — you had a similar type first half of July, second half of July type of performance of that around the $1 million in the first — each of the first 2 weeks of the quarter?

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Antony Koblish, TELA Bio, Inc. – Co-founder, President, CEO & Director [8]

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No. What I’m saying is, keep in mind that the last month of the quarter is 40% to 45% of revenue, right? So what I’m saying is July was very strong when compared to pre-COVID levels, right? So we started Q3 off at a very good place. There’s a lot of PO cleanup, maybe there was some of that pent-up demand that I just described thrown into the end of June too, Matt. So if we saw the last 2 weeks of June now ramping to infinity, we’d be very, very happy. But that’s not the case. We’re not there yet. There’s still these rolling brownouts, patchiness. Rep access is still hit or miss. I think we’re smoothing that out, particularly with our TELA LIVE program, which I think is very effective. But I think we can outkick and grow through all of this, and I think we’ll really know how we look in the last 2 weeks of this quarter when we compare that to the last 2 weeks of June, right? So I’m looking forward to that in September. But the trend in July was excellent, excellent in terms of where we started the quarter relative to Q2, even relative to Q1, I think. So yes, we’re pleased with it.

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Matthew Oliver O’Brien, Piper Sandler & Co., Research Division – MD & Senior Research Analyst [9]

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Okay. And then you started giving us a little bit of a peek behind the curve as far as the performance of the sales force. And I think you said that the reps you added in 2020 are doing about 10% of revenue in Q2?

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Antony Koblish, TELA Bio, Inc. – Co-founder, President, CEO & Director [10]

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A little higher.

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Matthew Oliver O’Brien, Piper Sandler & Co., Research Division – MD & Senior Research Analyst [11]

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I mean, I think you only added 4 reps in the first quarter. So that’d be like they’re on a run rate for about $100,000 a piece in just Q2. So that would seem like they’re ramping very quickly. Can you talk about why that might be? Are they focused on HealthTrust? And then this 200% increase in the docs that looked at TELA LIVE, just some of the things — some of these other metrics that you’re seeing underneath because the performance in the quarter especially versus — and I know it’s off a smaller base versus the rest of med tech, it’s quite good in terms of growth with everybody else contracting. So just other metrics that we can kind of get our head around as far as the better-than-expected performance for your business? And then where that could go from here in new accounts, et cetera?

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Antony Koblish, TELA Bio, Inc. – Co-founder, President, CEO & Director [12]

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Yes. So let’s level set. And I’ll just ask Stuart to correct me if I’m out of whack on the rep counts versus territories. But going into the IPO, we really had in the 20s, let’s say. And we really ended last year, 2019, with about 30, right?

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Stuart M. Henderson, TELA Bio, Inc. – VP of Corporate Development & IR [13]

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30 bodies.

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Antony Koblish, TELA Bio, Inc. – Co-founder, President, CEO & Director [14]

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About 30, about 30 reps. And so I’m including all of those reps when we got in there. So yes, there is a grouping of new reps. I think they’ve been very successful, really driven by the TELA LIVE program, right? So I mentioned one metric in my script monologue that we’ve seen about a 200% increase in average monthly revenue among surgeons who participated in a LIVE program. So I think that has helped us out tremendously. There are certain areas of the country, which we just didn’t have reps in pre-IPO, and we do now. And those territories, by and large, have really started to produce and the only mechanism available to us is TELA LIVE virtual and also through the contracting. And we’ve made sure that we’ve overlapped it — overlapped, sorry, the live programs in the contracted arenas. Now there’s another thing going on here as well with the LIVE programs, which I’m going to focus on. And that is — it’s that we’re also doing these LIVE programs for existing customers with the goal of expanding their personal usage. Let’s say they start off doing complex ventrals. We want to expand their usage into simple hernias or they’re perhaps a new customer around PRS, we use the LIVE program, so with — and we also want to spread into more surgeons within a hospital. So we’re seeing about a 60% increase in revenue from existing customers who participate in a LIVE program. And right now, and I expect this metric to get better as time goes forward, that we’re averaging over a 50% conversion of new users of our products that have done a LIVE virtual program since April. And I think that we’re going to see that ratio go up. I think there’s mitigating circumstances on why they may or may not be starting. It could have been elective procedures. It could have been just slowing down the back process and getting — going at the hospitals, what have you. But we’re seeing virtually on every metric, these TELA LIVE programs are having a positive impact. And the reason why that’s possible is because of the access that we’re seeing in HealthTrust and other IDNs. So I think that’s really what’s working for us, and that’s really the concept of creating our own reality. We wired it. We’ve mastered it. And now we got to just execute it over and over and over again. And we’ve been doing it. We’re averaging well over 20 of these LIVE surgeon engagements per month.

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Matthew Oliver O’Brien, Piper Sandler & Co., Research Division – MD & Senior Research Analyst [15]

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Okay. That’s really helpful. Last one is actually for Nora. Nora, was it the same kind of 90-10 split between hernia and plastic this quarter? And then the OpEx came in — I know you had signaled it was going to come down in Q2, but it was about 10% lower than I was expecting. I know you’re adding a few reps here. Should we expect levels that are slightly higher than Q2? And is it as far as thinking about Q3, Q4? Or are we going to go back to Q1 levels on OpEx?

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Nora E. Brennan, TELA Bio, Inc. – CFO [16]

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So I’ll answer your first one, Matt. So it is roughly about 90-10 still, the split between OviTex and PRS. With respect to OpEx, I mean, as Tony mentioned, that we’re going to start investing in our commercial program again. It’s — as surgeries come back, we’re going to spend a little bit more money. And so we’ll see it in the commercial as well as within R&D. So we should see some increases in our spending going forward, certainly higher than Q2.

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Operator [17]

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Your next question comes from the line of Kyle Rose from Canaccord.

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Kyle William Rose, Canaccord Genuity Corp., Research Division – Senior Analyst [18]

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Can you hear me all right?

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Antony Koblish, TELA Bio, Inc. – Co-founder, President, CEO & Director [19]

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Yes, Kyle.

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Nora E. Brennan, TELA Bio, Inc. – CFO [20]

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Yes.

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Kyle William Rose, Canaccord Genuity Corp., Research Division – Senior Analyst [21]

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So I had a couple of questions that dovetail on some of the other topics previously. So maybe just to start, you mentioned like pent-up demand a couple of times. I mean, obviously, you were really priming the pump with the TELA LIVE programs. But you already had some existing utilization with your underlying core user base. So maybe when you think about the growth that you saw in May and June, can you just try to tease out how much of that was just catch-up versus some of these new accounts coming on board?

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Antony Koblish, TELA Bio, Inc. – Co-founder, President, CEO & Director [22]

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Yes. I mean it’s hard for me to say there was any catch-up in May. May was 50% pre-COVID levels. We were scratching and clawing but diligently executing these LIVE programs, right? So I think the only place I can point to where I feel like if there was a pent-up demand perhaps could have been PO cleanup at the back end of June. That’s it. So I don’t think there was any kind of sustained pent-up demand much more than a couple of weeks. So I think most of what we drove was through this LIVE stuff that we’ve been doing. And keep in mind, we started doing it right at the very beginning in March, April, May, over and over and over again. And so we’re just starting to see the fruits of that given the time lines that it takes to get new customers up and running or just to go through the process. And we didn’t really have access to a lot of the supply chain, OR director-type people to get the hospitals moving much beyond the surgeons until really the end of May, early June. So right now, it’s just a little bit phase, right? I think we’re starting to see supply chain, OR director engagement started in June and is now picking up to more normal levels, albeit virtual. And then the surgeon side of things, the case volume really did not seem at good levels until we started to get through June and into July. But again, by July, we started to see this rolling brownout or patchiness here and there. So I think overall, most of what we drove here so far is due to our own efforts in LIVE. That’s where my head is at. We just talked to so many surgeons. It’s impossible for it not to be a big driver.

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Kyle William Rose, Canaccord Genuity Corp., Research Division – Senior Analyst [23]

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Okay. That’s very helpful. And then I appreciate the breakout of OviTex versus PRS. I’m wondering if you could just give us a little more insight on the OviTex side there, specifically around the minimally invasive and the laparoscopic utilization.

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Antony Koblish, TELA Bio, Inc. – Co-founder, President, CEO & Director [24]

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Yes. That’s an interesting — that’s a good interesting question, right? I mean last quarter, we were thinking the complex ventral stuff was going to lead us out, right, and then the PRS. And to a certain extent, that was the case. But if we look at how the quarter sort of smoothed out, it really wasn’t that much different in terms of ratios of the different types of procedures in the hernia arena pre-COVID. So we had roughly 64% of our Q2 hernia cases were ventral, umbilical, parastomal. Pre-COVID, when was that, I’d say Q4, it was 63%. And then on the inguinal side, that actually grew in Q2 to 19%. Pre-COVID, it was about 12%. And then for some reason, the hiatals came down a bit. We did about 22% hiatals in Q4 ’19 and about 13%. And so it was a good mix, and it was also a very consistent mix on open versus robotic versus laparoscopic. Roughly 60% of our procedures, 57% in Q2 were open. And in Q4, it was 53%. And then the robotic has actually been growing, right? Our pre-COVID robotic ratio was about 27% robotic. Now it’s 33% robotic. And then laparoscopic was 18%. And that, you’d expect, has come down a bit to 10% as the robot starts to take over. So I think the ratios of procedures and types of techniques has been pretty consistent as of Q2, which I think speaks to a pretty decent recovery on the hernia side, not in total procedure volume, at least in getting the patients that want to come back with an array of problems getting fixed. So I think that’s a positive sign all around.

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Kyle William Rose, Canaccord Genuity Corp., Research Division – Senior Analyst [25]

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I really appreciate the insights there. And then just one last one then on, if I can sneak one in, is just HealthTrust. I think on the Q1 call, you talked about being somewhere north of 65 accounts, but a lot of those hospital administrators has been furloughed and kind of we’re waiting to come back. So just how that has trended from a getting them contracted and into those hospitals standpoint?

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Antony Koblish, TELA Bio, Inc. – Co-founder, President, CEO & Director [26]

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Yes. Our percent of revenue in Q3 from HealthTrust accounts was about 30%. And you look at pre-COVID, that’s up a bit, right, from high 20s or mid to high 20s. And if you look at the number of accounts, we were pretty solid in Q2 at 55 HPG accounts. Q1, if you think of the first part of that quarter, was really driving those new accounts to come on and then fell off in March and really didn’t recover. Like I said, we didn’t have access to the supply chain folks until just starting in May, a little more so in June and July. So we expect that this HPG will go up. What’s really gratifying is if you look at our GPO contracting strategy, Kyle, is step 1 is implement HealthTrust, right? So I think we’re doing fine there. COVID has set us back, but we’ll be back. That’s going well. But the good news is that the second underlying strategy underneath that is to drive large IDNs. And that’s happening. For example, we just got what amounts to almost a sole agreement at Allegheny Health Network. We’re on contract at Mayo in Florida, and there’s just a great pipeline of consignment agreements and RFPs that are in motion. So this is a never-ending process. It’s going to be HealthTrust implementation, job one. Job 2 is this B2B process that’s really going to be focused on IDNs and consignment. We know that if there’s consignment inventory on the shelf, we can do cases, particularly with our virtual proctoring programs that are emerging. And then as far as the other GPOs go, we’re just going to surf that wave, and whenever those RFPs come up, we’ll do them. But for the most part, I feel like we’re — we’ve got more than enough to work with here on the GPO and IDN front between the IDN strategy and the HealthTrust implementation. So we’re really focused on making those parts of the business go now.

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Operator [27]

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Our next question comes from the line of Dave Turkaly of JMP Securities.

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David Louis Turkaly, JMP Securities LLC, Research Division – MD & Equity Research Analyst [28]

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Congrats on posting growth in a super difficult quarter. Tony, I was wondering maybe if you would be willing to share with us the number of active users that you may have had at the end of the quarter? And then I was just trying to get an idea around what percent were up and running and then maybe a guess at the percent where you’re seeing these brownouts, like what percent of the business that is? If possible?

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Antony Koblish, TELA Bio, Inc. – Co-founder, President, CEO & Director [29]

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Yes. Well, I mean, I’ll — let me — while Stuart’s scrambling to think about the numbers, I’ll just give some commentary on the rolling brownout, right? So we try to take that little block of what we’ll call Texas, Florida, Arizona. And that ran about 25 — those 3 states ran about 25% for Q2. And in July, that ran about 19%, so less than 20%. So I think that’s an example of one rolling brownout cluster of states, if you will, and there’s probably a bunch of those going on up and down all over the place. And even amongst that cluster, it’s not homogeneous, right? Texas has shut down certain counties, but they’re trying to move procedures. Florida, some of the HealthTrust accounts in Florida have actually stopped for now. And then Arizona is kind of a mixed bag. So I think it’s week-to-week. It’s not month-to-month with these rolling brownout clusters, but that gives you just an example, down 6%. And theoretically, those areas should have kept growing for us because they were rich in IDN and HealthTrust accounts, so on contract and also rich, particularly in Florida, with the LIVE programs. And we saw some great growth out of the LIVE programs in Florida, and then we’ve seen it sort of taper off a little bit. So Stuart wrote down the number of customers, about 270 customers in Q2 versus a little less than that, 265 or so in Q1. So yes, we grew the customer base as well. And that’s, I guess, with people starting and stopping. So it’s a good sign.

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David Louis Turkaly, JMP Securities LLC, Research Division – MD & Equity Research Analyst [30]

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Okay. Thanks for all that detail. I guess, maybe just sort of a quick follow-up, just the pipeline. I think you have a new LPR coming. And anything else you’d highlight for us in the remainder of the year?

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Antony Koblish, TELA Bio, Inc. – Co-founder, President, CEO & Director [31]

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Yes. So we’ve got a bunch of new products in the pipeline that we’ll talk about probably next year. Some really good ones. As I said in my remarks, our plan is to have a suite, a portfolio of PRS products and then we’ve got some really interesting new robot-specific hernia-based products that are in development. We got the bulk of our LPR product range out in Q1, so that’s still finding its footing. We’re not going to really add to that for the rest of this year. And then we’re really not going to add to the PRS product set for this year as well. So we’ve launched a bunch of new products this year. Our goal is to launch new products every year. So we’re not ready to talk about next year yet. The timing of some of those is in flux, getting our folks into the labs and doing contract research, animal studies, et cetera. But we’re tracking well for all those new products. We’ll have more to say next year on that or maybe at the end of this year.

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Operator [32]

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We do have a follow-up question from Matthew O’Brien from Piper Sandler.

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Matthew Oliver O’Brien, Piper Sandler & Co., Research Division – MD & Senior Research Analyst [33]

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Okay. Just quickly on PRS. I know you guys are circling the wagons right now on the hernia side, given what’s going on with COVID. So that’s the focus. How do we think about PRS over the next couple of years? I know that was a meaningful growth driver heading into the IPO. I’m sure you still think the market opportunity is huge. But how do we think about the progression of that product specifically now that things have gotten off to a little bit slower start because of COVID?

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Antony Koblish, TELA Bio, Inc. – Co-founder, President, CEO & Director [34]

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I think it’s going to be the same. I don’t see it changing. I mean, if anything, we’ve lost, what, 2 quarters, right? I think we’ve lost Q1 and Q2. I’ll be very darn happy if Q3 looks more like Q1 should have looked. And then I think you just spread it out going forward, Matt, and we keep stepping. If anything, I’m much more bullish on all of our products based on how the surgeons react, right? I mean, we’ve never had such an opportunity with this LIVE stuff to talk to 20 to 25 surgeons a month. And it’s really honing the way we present these products. It’s honing the way we present the data. It’s honing how we present all the science and work that went into them. And it’s also popping out a lot of new ideas. And there is a huge opportunity on the PRS front to have an array of tuned products that are engineered for specific surgeon philosophies and types and things like that. So if anything, long term, I’m more bullish on PRS given all of the flavors that I think we can roll out in the next 3 to 5 years with that portfolio. So I think as we roll out flavors of hernia — from hernia, where we started in 2017, we’ve been launching new products every year, and we’ll continue to do so. I think we’re going to have a similar looking portfolio over time on the PRS side. So right now, this is all really good foundational work. This LIVE stuff is keeping us going, allowing us to grow, allowing us to be aggressive in a smart way without being a burden to those that are on the front lines. But it’s also just been a gold mine engine for honing our messaging, honing our commercialization talk track and then driving new product ideas. So we’re going to keep going with this until we melt Zoom.

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Operator [35]

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Speakers, I am showing no further questions at this time. I would like to turn the conference back to Mr. Tony Koblish, President and CEO.

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Antony Koblish, TELA Bio, Inc. – Co-founder, President, CEO & Director [36]

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Thanks, everybody, for your interest, and we’ll see you next time. Stay safe out there. Bye.

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Operator [37]

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Thank you, speakers. Ladies and gentlemen, this concludes today’s conference call. Thank you all for joining. You may now disconnect.