TELA Bio, Inc.

Previous wording

Our OviTex portfolio consists of multiple product configurations intended to address various surgical procedures within hernia repair and abdominal wall reconstruction, including ventral, inguinal, and hiatal hernia repair. In addition, we have also designed an OviTex product specifically for use in laparoscopic and robotic-assisted hernia repair, which we market as OviTex LPR and began commercializing in November 2018. In February 2023, we launched two larger configurations of OviTex LPR, designed for ventral and incisional hernias. In April 2024, we launched OviTex IHR Reinforced Tissue Matrix, a new OviTex configuration specifically designed to address inguinal hernia procedures performed robotically and laparoscopically.

Current wording

Our OviTex portfolio consists of multiple product configurations intended to address various surgical procedures within hernia repair and abdominal wall reconstruction, including ventral, inguinal, and hiatal hernia repair. In addition, we have also designed an OviTex product specifically for use in laparoscopic and robotic-assisted hernia repair, which we market as OviTex LPR and began commercializing in November 2018. In February 2023, we launched two larger configurations of OviTex LPR, designed for ventral and incisional hernias. In April 2024, we launched OviTex IHR Reinforced Tissue Matrix, a new OviTex configuration specifically designed to address inguinal hernia procedures performed robotically and laparoscopically in the U.S., followed by a launch in the European markets in June 2025.

Previous wording

We primarily market our products through a single direct sales force, predominantly in the U.S., with a small number of sales representatives in the United Kingdom and European Union, and also utilize a smaller number of independent contractors and distributors in the United States and certain European countries. We have invested in our direct sales and marketing infrastructure to expand our presence and to promote awareness and adoption of our products. As of March 31, 2025, we had 76 sales territories in the U.S. and 13 sales territories in Europe. We believe we can enhance the productivity of our sales force by improving customer segmentation and targeting, implementing and further refining our proprietary training programs, leveraging support from our medical education and medical affairs functions to drive physician awareness, education and clinical understanding of our products, and utilizing engagement analytics to support further product development and enhancement opportunities. Additionally, we have contracted with three national group purchasing organizations (“GPOs”) in the United States covering our OviTex and OviTex PRS products and plan to continue to contract with additional GPOs and other integrated delivery networks (“IDNs”) to increase access to and penetration of hospital accounts for all products we commercialize.

Current wording

We primarily market our products through a single direct sales force, predominantly in the U.S., with a small number of sales representatives in the United Kingdom and European Union, and also utilize a smaller number of independent contractors and distributors in the United States and certain European countries. We have invested in our direct sales and marketing infrastructure to expand our presence and to promote awareness and adoption of our products. As of June 30, 2025, we had 76 sales territories in the U.S. and 15 sales territories in Europe. We believe we can enhance the productivity of our sales force by improving customer segmentation and targeting, implementing and further refining our proprietary training programs, leveraging support from our medical education and medical affairs functions to drive physician awareness, education and clinical understanding of our products, and utilizing engagement analytics to support further product development and enhancement opportunities. Additionally, we have contracted with three national group purchasing organizations (“GPOs”) in the United States covering our OviTex and OviTex PRS products and plan to continue to contract with additional GPOs and other integrated delivery networks (“IDNs”) to increase access to and penetration of hospital accounts for all products we commercialize.

Previous wording

The vast majority of our revenue to date has been generated by the sale of our OviTex products. Our revenue increased by $1.9 million, or 12%, from $16.6 million for the three months ended March 31, 2024 to $18.5 million for the three months ended March 31, 2025. Our net loss increased by $5.6 million, or 99%, from $5.7 million for the three months ended March 31, 2024 to $11.3 million for the three months ended March 31, 2025. The three months ended March 31, 2024 included a recognized gain of $7.6 million on the sale of NIVIS to the MiMedx Group, Inc. We have not been profitable since inception and as of March 31, 2025, we had an accumulated deficit of $370.0 million. We expect to incur losses for the foreseeable future.

Current wording

The vast majority of our revenue to date has been generated by the sale of our OviTex products. Our revenue increased by $4.1 million, or 26%, from $16.1 million for the three months ended June 30, 2024 to $20.2 million for the three months ended June 30, 2025 and by $6.0 million, or 18%, from $32.7 million for the six months ended June 30, 2024 to $38.7 million for the six months ended June 30, 2025. Our net loss decreased by $2.7 million, or 21%, from $12.6 million for the three months ended June 30, 2024 to $9.9 million for the three months ended June 30, 2025 and increased by $2.9 million, or 16% from $18.3 million for the six months ended June 30, 2024 to $21.2 million for the six months ended June 30, 2025. The six months ended June 30, 2024 included a recognized gain of $7.6 million on the sale of

Previous wording

Imposition of Tariffs on Import of Product:* *Our OviTex and OviTex PRS products are manufactured by Aroa at their FDA registered and ISO 13485 compliant facility in Auckland, New Zealand. As of the date of this report, the U.S. has imposed a 10% tariff on imports from New Zealand, including on the import of medical devices. While the terms of our agreement with Aroa provide that each of Aroa and our company will share equally the cost of the tariffs, the cost to cover such tariffs could lead us to increase the price of certain of our products, which may adversely impact demand for our products and competitive positioning.

Current wording

Imposition of Tariffs on Import of Product:* *Our OviTex and OviTex PRS products are manufactured by Aroa at their FDA registered and ISO 13485 compliant facility in Auckland, New Zealand. As of the date of this report, the U.S. has imposed a 15% tariff on imports from New Zealand, including on the import of medical devices. While the terms of our agreement with Aroa provide that each of Aroa and our company will share equally the cost of the tariffs, the cost to cover such tariffs could lead us to increase the price of certain of our products, which may adversely impact demand for our products and competitive positioning.

Previous wording

Cost of revenue (excluding amortization of intangible assets) increased by $0.7 million, or 14%, to $5.9 million for the three months ended March 31, 2025 from $5.2 million for the three months ended March 31, 2024. The increase in cost of revenue was primarily the result of an increase in products purchased to support demand from our higher unit sales and a higher charge for excess and obsolete inventory.

Current wording

Cost of revenue (excluding amortization of intangible assets) increased by $1.1 million, or 22%, to $6.0 million for the three months ended June 30, 2025 from $4.9 million for the three months ended June 30, 2024. The increase in cost of revenue was primarily the result of an increase in products purchased to support demand from our higher unit sales.

Previous wording

Research and development expenses increased by $0.1 million, or 6%, to $2.5 million for the three months ended March 31, 2025 from $2.4 million for the three months ended March 31, 2024. The increase was primarily due to higher study and development costs which were partially offset by lower compensation and benefits from a lower headcount.

Current wording

Research and development expenses decreased by $0.1 million, or 5%, to $2.2 million for the three months ended June 30, 2025 from $2.3 million for the three months ended June 30, 2024. The decrease was primarily due to lower compensation and benefits from a lower headcount which offset higher study and development costs.

Previous wording

Interest expense decreased by $0.1 million or 8% to $1.2 million for the three months ended March 31, 2025 from $1.3 million for the three months ended March 31, 2024 due to a decrease in our variable component of our interest rate.

Current wording

Interest expense decreased by $0.1 million or 11% to $1.2 million for the three months ended June 30, 2025 from $1.3 million for the three months ended June 30, 2024 due to a decrease in the variable component of our interest rate.

Previous wording

We recorded deferred tax expense of $0.1 million for the three months ended March 31, 2025 related to our foreign jurisdiction. No tax expense was recorded during the three months ended March 31, 2024.

Current wording

We recorded deferred tax expense of $33,000 for the three months ended June 30, 2025 related to our foreign jurisdiction. No tax expense was recorded during the three months ended June 30, 2024.

Previous wording

Revenue increased by $1.9 million, or 12%, to $18.5 million for the three months ended March 31, 2025 from $16.6 million for the three months ended March 31, 2024. The increase in revenue was primarily driven by an increase in unit sales of our hernia products, which resulted in the addition of new customers and growing international sales. This growth was partially offset by a decrease in average selling prices for our hernia products caused by product mix as the share of smaller-sized units increased. During the three months ended March 31, 2025, we sold 4,992 units of OviTex as compared to 3,857 units of OviTex during the three months ended March 31, 2024, a 29% increase in unit sales volume. Additionally, we sold 1,170 units of OviTex PRS during the three months ended March 31, 2025 as compared to 1,203 units during the three months ended March 31, 2024, a 3% decline in unit sales volume.

Current wording

Revenue increased by $6.0 million, or 18%, to $38.7 million for the six months ended June 30, 2025 from $32.7 million for the six months ended June 30, 2024. The increase in revenue was primarily driven by the addition of new customers, growing international sales and the U.S. launch of new larger-sized PRS configuration. This growth was partially offset by a decrease in average selling prices for our hernia products caused by product mix as the share of smaller-sized units increased. During the six months ended June 30, 2025, we sold 10,170 units of OviTex as compared to 8,267 units of OviTex during the six months ended June 30, 2024, a 23% increase in unit sales volume. Additionally, we sold 2,532 units of OviTex PRS during the six months ended June 30, 2025 as compared to 2,174 units during the six months ended June 30, 2024, a 16% increase in unit sales volume.

Previous wording

Sales and marketing expenses decreased by $0.9 million, or 5%, to $16.6 million for the three months ended March 31, 2025 from $17.5 million for the three months ended March 31, 2024. The decrease was primarily due to lower compensation costs from a decrease in headcount and lower consulting and travel expenses which were partially offset by higher commission expense on an increased revenue base.

Current wording

Sales and marketing expenses decreased by $0.8 million, or 2%, to $33.5 million for the six months ended June 30, 2025 from $34.2 million for the six months ended June 30, 2024. The decrease was primarily due to lower compensation costs from a decrease in headcount and lower consulting and travel expenses which were partially offset by higher commission expense on an increased revenue base and additional spending on post-market studies.

Previous wording

In March 2024, we entered into an asset purchase agreement with MiMedx Group, Inc. to sell certain assets related to NIVIS. These assets mainly included our existing inventory of NIVIS, with a net carrying value of $0.8 million, and certain intellectual property rights to sell NIVIS, with no carrying value. We transferred control of the nonfinancial asset group in March 2024 and recognized a gain of $7.6 million during the three months ended March 31, 2024.

Current wording

In March 2024, we entered into an asset purchase agreement with MiMedx Group, Inc. to sell certain assets related to NIVIS. These assets mainly included our existing inventory of NIVIS, with a net carrying value of $0.8 million, and certain intellectual property rights to sell NIVIS, with no carrying value. We transferred control of the nonfinancial asset group in March 2024 and recognized a gain of $7.6 million during the six months ended June 30, 2024.

Previous wording

As of March 31, 2025, we had cash and cash equivalents of $42.8 million, working capital of $53.2 million and an accumulated deficit of $370.0 million. As of December 31, 2024, we had cash and cash equivalents of $52.7 million, working capital of $62.5 million and an accumulated deficit of $358.7 million.

Current wording

As of June 30, 2025, we had cash and cash equivalents of $35.0 million, working capital of $41.7 million and an accumulated deficit of $379.9 million. As of December 31, 2024, we had cash and cash equivalents of $52.7 million, working capital of $62.5 million and an accumulated deficit of $358.7 million.

Previous wording

On October 24, 2024, we completed an underwritten public offering of 14,670,000 shares of our common stock, including the exercise in full of the underwriters’ overallotment option to purchase additional shares of common stock, at a price to the public of $2.25 per share and, in lieu of common stock to investors who so chose, pre-funded warrants to purchase 5,800,000 shares of common stock at a public offering price of $2.2499 per pre-funded warrant, which represents the per share public offering price for the shares of common stock less the $0.0001 per share exercise price for each pre-funded warrant. The offering resulted in net proceeds of $42.9 million, after deducting underwriting discounts

Current wording

On October 24, 2024, we completed an underwritten public offering of 14,670,000 shares of our common stock, including the exercise in full of the underwriters’ overallotment option to purchase additional shares of common stock, at a price to the public of $2.25 per share and, in lieu of common stock to investors who so chose, pre-funded warrants to purchase 5,800,000 shares of common stock at a public offering price of $2.2499 per pre-funded warrant, which represents the per share public offering price for the shares of common stock less the $0.0001 per share exercise price for each pre-funded warrant. The offering resulted in net proceeds of $42.9 million, after deducting underwriting discounts and commissions and other estimated offering expenses and assuming no subsequent exercise of the pre-funded warrants. The exercise of the pre-funded warrants, if any, is not expected to provide significant additional funding to the Company.

Previous wording

In March 2024, we sold our distribution rights to MiMedx Group, Inc. in exchange for an initial $5.0 million payment and additional future revenue-share payments aggregating between a minimum of $3.0 million and a maximum of $7.0 million based on net sales of NIVIS (now marketed as HELIOGEN) over the subsequent two years. Revenue-share payments commenced after the third quarter of 2024. At March 31, 2025, $0.3 million of this amount had been collected.

Current wording

In March 2024, we sold our distribution rights to MiMedx Group, Inc. in exchange for an initial $5.0 million payment and additional future revenue-share payments aggregating between a minimum of $3.0 million and a maximum of $7.0 million based on net sales of NIVIS (now marketed as HELIOGEN) over the subsequent two years. Revenue-share payments commenced after the third quarter of 2024. At June 30, 2025, $0.6 million of this amount had been collected.

Previous wording

Based on our current business plan, we believe that our existing cash resources will be sufficient to meet our capital requirements and fund our operations for at least the next 12 months from the issuance of this Quarterly Report. If these sources are insufficient to satisfy our liquidity requirements, we may seek to sell common or preferred equity or debt securities or enter into a new credit facility. In November 2023, we entered into a new Equity Distribution Agreement (the “Equity Agreement”) with Piper Sandler & Co, (“Piper”) in connection with the establishment of an at-the-market offering program under which we may sell shares of our common stock, from time to time through Piper as sales agent, in an initial amount of up to $50 million. No sales were made under the Equity Agreement during the three months ended March 31, 2025. If we raise additional funds by issuing equity or equity-linked securities, our stockholders would experience dilution and any new equity securities could have rights, preferences and privileges superior to those of holders of our common stock. Debt financing, if available, may involve covenants restricting our operations or our ability to incur additional debt. We cannot be assured that additional equity, equity-linked or debt financing will be available on terms favorable to us or our stockholders, or at all, including as a result of market volatility stemming from macroeconomic conditions, including those related to banking instability, changes in trade policies, increasing interest rates or other factors. If we are unable to obtain adequate financing, we may be required to delay or reduce the current development, commercialization and marketing plans for our products.

Current wording

Based on our current business plan, we believe that our existing cash resources will be sufficient to meet our capital requirements, debt repayment obligations and fund our operations for at least the next 12 months from the issuance of this Quarterly Report. If these sources are insufficient to satisfy our liquidity requirements, we may seek to sell common or preferred equity or debt securities or enter into a new credit facility. In November 2023, we entered into a new Equity Distribution Agreement (the “Equity Agreement”) with Piper Sandler & Co, (“Piper”) in connection with the establishment of an at-the-market offering program under which we may sell shares of our common stock, from time to time through Piper as sales agent, in an initial amount of up to $50 million. No sales were made under the Equity Agreement during the six months ended June 30, 2025. If we raise additional funds by issuing equity or equity-linked securities, our stockholders would experience dilution and any new equity securities could have rights, preferences and privileges superior to those of holders of our common stock. Debt financing, if available, may involve covenants restricting our operations or our ability to incur additional debt. We cannot be assured that additional equity, equity-linked or debt financing will be available on terms favorable to us or our stockholders, or at all, including as a result of market volatility stemming from macroeconomic conditions, including those related to banking instability, changes in trade policies, increasing interest rates or other factors. If we are unable to obtain adequate financing, we may be required to delay or reduce the current development, commercialization and marketing plans for our products.

Previous wording

During the three months ended March 31, 2025, we used $9.7 million of cash in operating activities, resulting from our net loss of $11.3 million, changes in operating assets and liabilities of $0.6 million partially offset by our non-cash items of $2.1 million. Our non-cash items were comprised of stock-based compensation expense of $1.0 million, our excess and obsolete inventory charge of $0.6 million, depreciation and amortization expense of $0.3 million and noncash interest expense of $0.2 million. The change in our operating assets and liabilities was primarily related to changes in inventory and accounts receivable and a decrease in accrued expenses and other current liabilities partially offset by increases in accounts payable.

Current wording

During the six months ended June 30, 2025, we used $17.6 million of cash in operating activities, resulting from our net loss of $21.2 million, changes in operating assets and liabilities of $0.2 million partially offset by our non-cash items of $3.8 million. Our non-cash items were primarily comprised of stock-based compensation expense of $2.0 million, our

Previous wording

During the three months ended March 31, 2024, we used $14.4 million of cash in operating activities, resulting from our net loss of $5.7 million, non-cash items of $5.5 million and the change in operating assets and liabilities of $3.2 million. Our non-cash items were comprised of the gain on sale of NIVIS of $7.6 million, stock-based compensation expense of $1.1 million, our excess and obsolete inventory charge of $0.6 million, depreciation and amortization expense of $0.2 million and noncash interest expense of $0.2 million. The change in our operating assets and liabilities was primarily related to changes in inventory and accrued expenses and other current liabilities partially offset by increases in accounts payable.

Current wording

During the six months ended June 30, 2024, we used $25.1 million of cash in operating activities, resulting from our net loss of $18.3 million, non-cash items of $3.7 million and the change in operating assets and liabilities of $3.1 million. Our non-cash items were comprised of the gain on sale of NIVIS of $7.6 million offset by stock-based compensation expense of $2.2 million, our excess and obsolete inventory charge of $0.9 million, depreciation and amortization expense of $0.5 million and noncash interest expense of $0.3 million. The change in our operating assets and liabilities was primarily related to changes in inventory and accrued expenses and other current liabilities partially offset by increases in accounts payable.

Previous wording

During the three months ended March 31, 2025, cash provided by investing activities was $0.1 million consisting of proceeds received from the sale of NIVIS of $0.2 million offset by $32,000 in purchases of property and equipment.

Current wording

During the six months ended June 30, 2025, cash provided by investing activities was $0.3 million consisting of proceeds received from the sale of NIVIS of $0.5 million offset by $0.1 million in purchases of property and equipment.

Previous wording

During the three months ended March 31, 2024, cash provided by investing activities was $4.7 million consisting of the proceeds received from the sale of NIVIS of $5.0 million partially offset by $0.3 million in purchases of property and equipment.

Current wording

During the six months ended June 30, 2024, cash provided by investing activities was $4.8 million consisting of proceeds received from the sale of NIVIS of $5.4 million offset by $0.6 million in purchases of property and equipment.

Previous wording

During the three months ended March 31, 2025, cash used in financing activities was $0.1 million, consisting primarily of payments of withholding taxes related to stock-based compensation to employees partially offset by proceeds received from the issuance of common stock under the employee stock purchase plan.

Current wording

During the six months ended June 30, 2025, cash used in financing activities was $0.1 million, consisting primarily of payments of withholding taxes related to stock-based compensation to employees partially offset by proceeds received from the issuance of common stock under the employee stock purchase plan.

Previous wording

During the three months ended March 31, 2024, cash provided by financing activities was $0.1 million, consisting primarily of $0.4 million in proceeds received from the exercise of stock options and from the issuance of common stock under the employee stock purchase plan partially offset by the payment of withholding taxes related to stock-based compensation to employees.

Current wording

During the six months ended June 30, 2024, cash provided by financing activities was $0.1 million, consisting primarily of proceeds received from the exercise of stock options and from the issuance of common stock under the employee stock purchase plan partially offset by the payment of withholding taxes related to stock-based compensation to employees.

Previous wording

The MidCap term loan matures on May 1, 2027 and bears interest at a rate equal to 6.25% plus the greater of one-month Term SOFR (as defined in the MidCap Credit Agreement) or 1.0%. We are required to make 36 monthly interest payments beginning on June 1, 2022 (the “Interest-Only Period”). If we are in covenant compliance at the end of the Interest-Only Period, we will have the option to extend the Interest-Only Period by 12 months to 48 monthly interest payments, followed by 12 months of straight-line amortization, with the entire principal payment due at maturity. If we

Current wording

The MidCap term loan matures on May 1, 2027 and bears interest at a rate equal to 6.25% plus the greater of one-month Term SOFR (as defined in the MidCap Credit Agreement) or 1.0%. Since June 2022, we have made 36 monthly interest