Earnings call transcript: Myomo Q1 2025 reports strong revenue growth, stock dips

Myomo Inc (MYO) reported its first-quarter 2025 financial results, revealing a significant year-over-year revenue increase but a slight drop in stock price during after-hours trading. The company met its earnings per share (EPS) forecast of -$0.08, while revenue surpassed expectations at $9.8 million, compared to a forecast of $9.3 million. According to InvestingPro data, the company maintains a "GOOD" overall financial health score, with particularly strong momentum metrics. Despite strong financial performance, Myomo’s stock fell by 4.75% in after-hours trading, closing at $4.61.

Key Takeaways

• Myomo’s Q1 2025 revenue increased by 162% year-over-year.
• EPS met expectations at -$0.08.
• Stock price fell by 4.75% in after-hours trading.
• Gross margin improved to 67.2% from 61.2% a year earlier.
• The company forecasts a return to positive operating cash flow by Q4 2025.

Company Performance

Myomo demonstrated robust growth in the first quarter of 2025, driven by a 100% increase in MyoPro revenue units delivered. The company’s gross margin improved significantly, reflecting operational efficiencies and a higher average selling price. InvestingPro analysis shows the company’s impressive 69% revenue growth over the last twelve months, with a robust current ratio of 3.22x, indicating strong operational efficiency. Myomo’s strategic initiatives to expand manufacturing capacity and enhance product offerings have positioned it well in the competitive powered arm brace market.

Financial Highlights

• Revenue: $9.8 million, up 162% year-over-year
• Earnings per share: -$0.08, meeting forecasts
• Gross margin: 67.2%, up from 61.2% in Q1 2024
• Net loss: $3.5 million
• Cash and equivalents: $21.5 million

Earnings vs. Forecast

Myomo’s revenue of $9.8 million exceeded the forecast of $9.3 million by approximately 5.4%. The EPS of -$0.08 was in line with expectations, indicating stability in the company’s financial performance. The revenue beat highlights Myomo’s successful execution of its growth strategy.

Market Reaction

Following the earnings announcement, Myomo’s stock price fell by 4.75% in after-hours trading, closing at $4.61. This decline came despite the company’s strong revenue performance and may reflect investor concerns about the net loss and future profitability. InvestingPro data indicates the stock has shown significant volatility, with a beta of 1.63, while trading at a Price/Book ratio of 6.73x. The stock remains within its 52-week range, with a high of $7.17 and a low of $2.76. Subscribers to InvestingPro can access 7 additional key insights about MYO’s valuation and financial health.

Outlook & Guidance

For the second quarter of 2025, Myomo projects revenue between $9 million and $9.5 million, representing a 20-26% year-over-year growth. The company aims to achieve positive operating cash flow by the fourth quarter of 2025. According to InvestingPro analysis, analysts maintain a strong buy consensus on the stock, with target prices ranging from $6.75 to $11.00. Myomo continues to invest in marketing and product development to support its long-term growth objectives. Detailed analysis and comprehensive valuation metrics are available in the exclusive Pro Research Report, part of the InvestingPro subscription.

Executive Commentary

CEO Paul Gudonis emphasized the company’s growth, stating, "We delivered 182 MyoPro revenue units in the first quarter, up 100% from Q1 2024." CFO Dave Henry added, "We continue to expect to return to positive operating cash flow by the fourth quarter of 2025." These statements underscore the company’s focus on scaling operations and achieving financial sustainability.

Risks and Challenges

• Insurance authorization difficulties could impact revenue recognition.
• Challenges with advertising algorithms may affect marketing effectiveness.
• International expansion, particularly in Germany, presents both opportunities and risks.
• The need to maintain competitive advantage in a rapidly evolving market.
• Economic uncertainties could influence consumer spending on healthcare products.

Q&A

During the earnings call, analysts inquired about Myomo’s international expansion strategy, particularly in Germany, and the growth potential of its Orthotics and Prosthetics (O&P) channel. Management addressed concerns about insurance authorizations and highlighted ongoing efforts to enhance their advertising approach in light of algorithm changes.

Full transcript - Myomo Inc (MYO) Q1 2025:

Conference Operator: Good afternoon, and welcome to the Myomo’s First Quarter twenty twenty five Earnings Conference Call. All participants will be in listen only mode. After today’s presentation, there will be an opportunity to ask questions. Please note this event is being recorded. I would now like to turn the conference over to Turf Patel.

Please go ahead.

Turf Patel, Investor Relations, Alliance Advisors: Thank you, operator, and good afternoon, everyone. This is Turf Patel with Alliance Advisors IR. Welcome to the Myomo first quarter twenty twenty five conference call. With me on today’s call are Myomo’s Chief Executive Officer, Paul Gudonis and Chief Financial Officer, Dave Henry. Before we begin, I’d like to caution listeners that statements made during this call by management other than historical facts are forward looking statements.

The words anticipate, believe, estimate, expect, intend, guidance, outlook, confidence, target, project and other similar expressions are typically used to identify such forward looking statements. These forward looking statements are not guarantees of future performance and may involve and are subject to risks, uncertainties and other factors that may affect Myomo’s business, financial condition and operating results. These risks, uncertainties and other factors are discussed in Myomo’s filings with the Securities and Exchange Commission. Actual outcomes and results may differ materially from what’s expressed in or implied by these forward looking statements. Furthermore, except as required by law, Myomo undertakes no obligation to revise or update any forward looking statements to reflect events or circumstances after the date of this call today, 05/07/2025.

It’s now my pleasure to turn the call over to Myomo’s CEO, Paul Gudonis. Paul, please go ahead.

Paul Gudonis, Chief Executive Officer, Myomo: Thanks, Terence. Good afternoon and thank you all for joining us today. During our Q4 earnings call in March, I commented on our first mover advantage with MyoPro and I shared that we are the technology leader with an exciting product development roadmap and we also earmarked a good portion of the proceeds from our December 2024 capital raise to expand our R and D capabilities. Already in 2025, we’ve introduced two product upgrades, the Mark II clinical unit and the MyoPro 2X. The Mark Mobile Arm Rehab Kit is an adjustable universal size device used by clinicians such as rehab therapists and certified prosthesis orthotist to demonstrate how a patient can move their arm and hand with our powered arm brace and to conduct an evaluation of the patient to see if they’re a good candidate for their own custom MyoPro.

This device is critical to developing our new orthotics and prosthetics O and P distribution channel, so that they can recruit and build their own patient pipelines. And just last week, we announced the launch of the MyoPro 2X, an upgraded version of the MyoPro two plus The launch of the MyoPro 2X reflects our strategy of continuous innovation based on real world patient and clinical experience and aims to improve independent device use and support of daily functional tasks. After a thorough product development process including clinical input from our own staff and other O and P professionals and the knowledge gained from helping over 3,000 patients who’ve already received the MyoPro, we’re excited about the benefits of this new version of our flagship device. MyoPro 2X is our most advanced product that leverages our first mover position. We’ve already started to take orders for it from our direct provider business and our O and P channel partners.

If there’s more innovation to come as we continue development of next generation MyoPro three and other enhancements that we’ll be delivering to patients in the future. Now on to Q1 metrics, we’re reporting strong year over year revenue growth including from Medicare patients. The conclusion of Q1 marked the one year anniversary of Medicare coverage of the MyoPro orthosis for medically qualified patients as patients covered by Part B have had access to the MyoPro with the lump sum fee schedule since 04/01/2024. While the first quarter exhibited the typical seasonality of previous years, we achieved strong revenue growth while addressing some temporary speed bumps. The changes in how marketers can direct their messages to individuals with certain health conditions made by Meta, which operates Facebook and other social media platforms impacted our lead generation efforts in January and February.

We saw a similar downturn in patient leads when Apple introduced restrictions on personal health information on the iOS mobile operating system several years ago. As we’ve done before, we’ve successfully adjusted our advertising approach and improved generation of leads in March and a record number of leads in April. However, we have fewer patients moving through the authorization process in Q1 and in our internal plans. In addition, Medicare Advantage and certain other commercial insurance plans continue to deny or delay authorizations for large percentage of physician orders for MyoPro. As a result of these two factors, our authorizations were only up 18% year over year, our cost per pipeline had increased and after delivering approximately 180 units in the quarter, our backlog was down year over year heading into Q2.

So while we expect slightly lower revenue in Q2 versus Q1, we’ve addressed these new challenges and have some very positive metrics to report today as we reaffirm our financial targets for the year. We delivered 182 MyoPro revenue units in the first quarter, up 100% from Q1 twenty twenty four and our ASP increased by about 30% over the prior year. Q1 revenues increased by more than 160% to $9,800,000 with Medicare Part B patients representing 60% of revenue. We added a record 700 medically qualified candidates to our patient pipeline during Q1 and ended the quarter with a record number of nearly 1,500 patients in the process of obtaining MyoPro. Two thirteen MyoPro’s were authorized and ordered in Q1 and our international business, which is primarily sales via O and P providers in Germany performed well again generating over $1,300,000 in revenue.

Earlier this year, we completed our move from Downtown Boston to our new facility in Burlington, Massachusetts with manufacturing capacity now at 120 units per month, which includes revenue units, MyoPro 2X demo units and the new Mark II clinical evaluation devices. We’re now planning for the next phase of floor space expansion to meet our forecasted demand for later this year and beyond. While we increased our advertising spend in Q1, as I mentioned, we were temporarily impacted by how Meta changed its policies about personal health information that is available to marketers on Facebook. It took our ad agency several weeks to adjust to these changes. So our advertising efficiency was down for the first half of the quarter, resulting in a higher cost per pipeline ad at that time.

We still added a record 700 candidates to the patient pipeline. And based on our results that we’ve seen in March and April, we have rebounded well with the modifications we put in place. We continue to expand our presence in the O and P channel with outreach by our team of account reps and clinical trainers and participation in various industry events. We’ve been recruiting and training O and P industry practitioners on the MyoPro and these clinicians are now ready to move into the next phase of becoming a certified MyoPro center of excellence. MyoPro is clinically complex and these external clinicians must make up large commitment to learn the product, educate their local referral sources and work patient by patients and insurance by insurance for coverage.

Even so these early adopters in the O and P channel are making the necessary commitments to begin dispensing the MyoPro to their qualified patients. We’ve now done initial training for more than 300 CPOs, up from 160 at the start of the year. So these CPOs can become begin assessing patients and building their own MyoPro pipelines. Our O and P revenue was $475,000 in Q1, up 87% from a year ago, but down $125,000 sequentially reflecting the seasonality of this channel. For our O and P partners, we offer robust remote and on demand training for our learning management system, while most of the clinical training is being completed in person at the O and P clinics and facilitated by our growing team of clinical trainers.

We’re adding more O and P clinics across the country, including more Hanger regional offices who can engage with their patients. After these sessions at their locations, we support our O and P partners with other training in the field. For example, we regularly join clinical and services to demonstrate our technology of therapists and other clinicians who treat patients that might benefit from MyoPro. And with the release of the new MyoPro 2X, we are conducting multi day certification classes at O and P clinics, which include evaluating patients for MyoProbe to expand their patient pipeline and revenue potential. We expect this channel’s growth to accelerate during the rest of the year.

However, order flow will depend on the reimbursement environment and the insurance mix of the patients they see. As for the current reimbursement environment, not much has changed since our last call. Access for patients covered by standard fee for service Medicare Part B is going very well and has been the largest source of our growth over the past twelve months. But too many patients are still being denied to MyoPro by Medicare Advantage and certain other commercial payers. This is the same situation impacting other healthcare providers and result in fewer authorizations and orders than we anticipated in the first quarter.

In our direct billing channel, we advocate for the patients on a case by case basis by working with their physician and CPO to determine the clinical candidacy and obtain appropriate medical records and documentation, all of which are needed to request an authorization from their insurer. If our requests are denied, we file appeals and when necessary take insurance denials all the way to the administrative law judge hearings. We’re often successful, but too many times patients are not able to get a MyoProbe because of these high denial rates or the timeline for resolution for pre authorization can remain lengthy and variable. To improve this insurance access, our Chief Medical Officer is working closely with legal counsel and will continue to engage with payer medical directors to cover the MyoPro for their enrollees. In addition to working to change payer policies, we continue to enter into contracts with health insurance plans to become an in network provider with our direct business.

We signed several new state contracts since the beginning of the year. We have negotiations underway with some of the national health insurance plans. At this point, we’ve executed or in the process of finalizing contracts covering 25,000,000 lives, including several new state Blue Cross Blue Shield plants. Before I pass the call to Dave, we previously shared that we overachieved our goal of breakeven cash flow from operations in Q4 of twenty twenty four. We completed a successful capital raise at the end of last year to fund our growth plans for this year and beyond.

We’re actively deploying those funds and making investments in marketing, product development and the owned feed distribution channel as we work to be cash flow positive again before the end of the year. I’ll now let our CFO, Dave Henry provide some more details on our financial performance.

Dave Henry, Chief Financial Officer, Myomo: Thank you, Paul and good afternoon everyone. Let me start my remarks with a review of our first quarter financial results. Revenue for the first quarter of twenty twenty four was $9,800,000 This represents a 162 percent increase versus the prior year quarter and was driven by a higher number of revenue units and a higher ASP. Our growth was fueled by revenues from patients with Medicare Part B coverage and international revenues. We delivered 182 MyoPro revenue units during the quarter, up 100% year over year, reflecting the higher velocity of revenues, particularly from patients with Medicare Part B.

Record 81 revenue units came from authorizations and orders received in the first quarter. Higher velocity of revenue is also reflected in the fact that approximately 90% of our first quarter revenue was recorded at either shipment or delivery. Our average selling price or ASP increased 31% versus the prior year to approximately $54,000 Medicare Part B patients represented 59% of total revenue in first quarter, up from 57% of revenue in fourth quarter, highlighting our continued success educating this patient population. Medicare Advantage revenue was 17% of first quarter revenue, an increase of 18% year over year. Growth in Medicare Advantage revenues is lagging however compared to Medicare as we continue to experience a high number of denials forcing us into an appeals process in order to serve these patients.

79% of our revenue in the first quarter came from the direct billing channel compared with 59% in the prior year quarter, which was prior to the effective date of the Medicare fees. International revenue was $1,300,000 in the first quarter, representing 13% of quarterly revenue, primarily from Germany. International revenues were up 42% year over year. As of 03/31/2025, pipeline stood at fourteen eighty two patients, an increase of 33% year over year. In first quarter, we added 700 new patients to the pipeline, which was up 42% over the prior year quarter.

While the pipeline adds were a record, they were lower than we were planning due to an algorithm change by Meta at the beginning of the year, which impacted lead generation for the first six weeks or so of the quarter. In our fourth quarter conference call, we noted an expectation for a higher cost per pipeline added in the first quarter. That expectation turned out to be correct as cost per pipeline add was approximately $2,300 in the first quarter, which was up 31% year over year. 29% of first quarter pipeline additions were Medicare Part B patients and 17% of the quarter end pipeline were Medicare Part B patients. This reflects the increased velocity in moving Medicare patients through the process of obtaining a MyoPro as compared with payers that require pre authorizations.

Paul mentioned earlier that our record number of leads in April To elaborate further on a per lead basis, the cost in April was roughly half of the per cost per lead or the per lead cost in January and February. If this continues, we expect our cost per pipeline add will be lower in the second quarter compared to the first quarter. Backlog represents insurance authorizations and orders received, but not yet converted to revenue. And in the case of Medicare Part B patients, those patients for whom we have collected medical records and being qualified for delivery based on our inclusion criteria. We ended the quarter with a backlog of two forty nine patients, a decrease of 9% versus the prior year.

The decrease reflects fewer pre authorizations being provided by Medicare Advantage plans and a backend loading of the pipeline adds due to the meta algorithm change resulting in fewer pipeline adds being converted to backlog. In addition, the velocity of revenue is increasing as the mix of Medicare revenue increases resulting in less beginning backlog required for a given amount of forecast revenue. Contributing to our backlog, we received two thirteen authorizations and orders during the first quarter, an increase of 18% year over year. Gross margin for the first quarter of twenty twenty five was 67.2 percent compared with 61.2% for the prior year quarter. The increase was driven primarily by a higher ASP as first quarter twenty twenty four ASP did not reflect the Medicare fees and also by higher fixed cost absorption.

Total operating expenses for the first quarter of twenty twenty five were $10,100,000 up 64% over first quarter twenty twenty four. This increase was driven primarily by higher headcount throughout the organization as we increased capacity, higher advertising spend and higher R and D expenses. Growth in operating expenses reflects the planned investment of a portion of the proceeds from the December 2024 offering. Advertising expense in the first quarter was $1,600,000 an increase of 51% year over year. Operating loss for the first quarter of twenty twenty five was 3,500,000 down 9% compared with a $3,900,000 operating loss in the prior year quarter.

Net loss for the first quarter of twenty twenty five was $3,500,000 or $08 per share as compared to the net loss of $3,800,000 or $0.10 per share for the first quarter of twenty twenty four. As of 03/31/2025, approximately $7,100,000 pre funded warrants are outstanding from our offerings in 2023 and January 2024. These pre funded warrants are considered common stock equivalents under GAAP and are included in our weighted average shares outstanding. However, approximately 1,500,000 of those pre funded warrants were exercised in April. Turning now to our balance sheet and cash flows.

Cash, cash equivalents and short term investments as of 03/31/2025 were $21,500,000 We maintain a $4,000,000 accounts receivable credit line, which is currently undrawn. In February, we entered into an amendment to our line of credit facility with Silicon Valley Bank. In addition to changes to increase availability under the line, we also entered into a $3,000,000 term loan facility, which can be drawn at any time until 02/28/2026. Cash used for operations was $2,700,000 in the first quarter, consistent with our plans to ramp hiring and our marketing spend to support growth in the direct billing channel in 2025. We believe our cash and cash equivalents are sufficient to fund our operations for at least the next twelve months.

Looking ahead, given our backlog entering second quarter and anticipated fill units, we expect second quarter revenue to be between $9,000,000 and $9,500,000 up 20% to 26% year over year. For the full year, we continue to expect 2025 revenue to be in the range of 50,000,000 to $53,000,000 representing growth of 54% to 66% over 2024. From a cash standpoint, we continue to expect negative cash flows through third quarter of twenty twenty five, the second quarter being the highest burn quarter due to the combination of incentive compensation payments and a higher expected operating loss as we continue to add capacity to support expected revenue growth in the second half of the year. We continue to expect to return to positive operating cash flow by fourth quarter twenty twenty five. With that financial overview, I’ll turn

Paul Gudonis, Chief Executive Officer, Myomo: the call back to Paul. Thanks, Dave. During the rest of this year, we’re going to continue to execute on what worked really well last year, but a greater scale. The early lead generation issues are behind us. Our enhanced marketing now engages more patients, families and clinicians than ever before, revitalizing the funnel for MyoPro growth in our direct provider business while we build the O and P channel.

We also have a robust product development program underway to build upon our first mover advantage. But we’ve encountered changes in the external environment in the past. We’ve successfully pivoted our operations. I look back into when COVID hit back in 2020, we had to pause manufacturing deliveries for two months. And then we introduced online patient screenings and a remote measurement kit.

Our revenues grew over 90% that year. And in 2021, Apple introduced changes in its iOS operating system to enhance privacy features regarding health information. After we changed our approach, once again, our revenues continue to grow. Another topic before I take your questions. In March, we hosted an all employee event where our staff from around the world met in Burlington, our new offices to celebrate our successes in 2024, tour the new facility and learn and train together.

During that event with everyone assembled in one place, I was reminded of the incredible talent, knowledge and passion we have in this company. And this capability of our teams working together toward our mission, executing a complex revenue cycle from lead generation to manufacturing, fitting and post delivery support is a major asset and competitive advantage for our company. I recently spoke with Sandra, a woman who suffered a stroke over twenty years ago, who told me about her excitement of having her MyoPro approved by a major Medicare Advantage plan earlier this year. It was a Blue Cross Blue Shield plan that is in the contracting process with us. Sandra learned about the MyoPro on Facebook and she shared with me how the MyoPro has enabled her to work at her job in a restaurant with both arms, perform household tasks independently, save money by eliminating the need for a home health aid and perhaps most importantly, regain a sense of dignity.

The story reflects the profound impact our technology has on people’s lives and why we remain focused on our mission to restore independence for those living with upper limb paralysis. So with that update and overview of our plans for 2025, we’re now ready to take your questions. Operator?

Conference Operator: Thank you. We will now begin the question and answer session. Our first question will come from Chase Knickerbocker with Craig Hallum. Please go ahead.

Chase Knickerbocker, Analyst, Craig Hallum: Good afternoon, Paul and Dave. Thanks for taking my questions. Maybe just first, could you elaborate a little bit more on the workaround around the meta issue that’s driving that advertising efficiency improvement sequentially? And how sustainable that you expect that improvement to be kind of going forward as we think about Q3 and Q4 pipeline adds as well?

Paul Gudonis, Chief Executive Officer, Myomo: Yes. Thanks, Chase. Well, Meta made some changes as Dave said in their algorithms to limit the amount of sort of tracking that you can do of where patients go and therefore be able to direct ads to the right individuals that are the target for MyoPro. So we work with our agency. We made some changes.

I will tell you that I consider those proprietary, because we’re also competing with other healthcare providers for those same eyeballs and patients. But those worked very well. And as Dave said, we had a record number of leads in April. And as long as that policy stays in place as it is, it should be sustainable. So that’s our view as we continue to expect to hit our numbers for 2025.

Chase Knickerbocker, Analyst, Craig Hallum: So that implies a call it a cost per pipeline add of $1,200 or so. And there’s confidence from the team that you can kind of maintain that efficiency through the year, just to put a finer point to it, Paul?

Dave Henry, Chief Financial Officer, Myomo: It’ll be a little bit the cost per pipe, I don’t know if it’d be $1,200 we’ll see. I think the, what I would say is that on a per lead basis, the cost per lead in April was half of what we saw in January and February. So I think more realistically, if we can kind of hold that, we were around 1,400 to 1,500 for 2024. I think that’s what we would be looking to see.

Chase Knickerbocker, Analyst, Craig Hallum: Got it. And the percentage of pipeline drops stepped up a little bit sequentially. Any drivers there to call out other than kind of normal seasonal dynamics with deductible resets and Not

Dave Henry, Chief Financial Officer, Myomo: really seasonal, it’s typical patient dynamics. It’s most of the time when a patient drops from the pipeline, is because, we can’t get ahold of them again after the initial contact. That’s usually the top of the pareto. It’s something we can’t control. And then the other reasons would be insurance changes, They lose interest.

Those are other things that we see also different changes with their health. When it comes to the backlog, the biggest, if there’s a drop from the backlog, the biggest reason is the change in clinical presentation at the time of fitting. And at that time, we may find that the patient not, should not have a MyoPro at that time. And so we will then, advise them to seek more therapy or something like that and then try to deliver later.

Chase Knickerbocker, Analyst, Craig Hallum: Got it. And then just last for me, as we think about kind of what Q2 guidance implies for second half revenue ramp, how should we be thinking about kind of cadence of revenue in Q3 and Q4 as we kind of adjust to this guidance? And it calls for a decent step up in backlog kind of sequentially, but again, particularly in the back half. Just speak to kind of the visibility that you have into those improvements and so far in April?

Dave Henry, Chief Financial Officer, Myomo: Yes. Mean, we are achieving those metrics means that we need to have a greater number of pipeline adds than the 700 in Q1. It does need the means that the backlog needs to go up. But as I mentioned in my comments, with Medicare being a larger portion of our revenue mix, we don’t necessarily need as higher backlog for a given revenue forecast because things are moving through the process faster. And we’ve had now a few quarters now of a high number of fill units.

I think I said 81 fill units of the 182. So 45% or so of our revenue units came from authorizations and orders that were received inside the quarter. And so as long as the Medicare percentage of revenue stays where it is, expect that the fill percentage will stay the same way. So long as we continue doing what we’re trying to do, which is at that top of the funnel filled up.

Chase Knickerbocker, Analyst, Craig Hallum: Got it. Thank you, Dave. Thanks, Paul.

Paul Gudonis, Chief Executive Officer, Myomo: Thanks, Chase.

Conference Operator: Our next question will come from Scott Henry with Alliance Global Partners. Please go ahead.

Scott Henry, Analyst, Alliance Global Partners: Thank you and good afternoon. Just starting with the top of the funnel, your $700,000,000 a pretty good number. It was above the last two quarters, a record high. So if that was kind of an impaired number in January, February, the implication would be 800,000,000 is probably right around the corner for a quarter and probably on its way to 900,000,000 Any thoughts on that?

Dave Henry, Chief Financial Officer, Myomo: I think that you’re thinking the way that we’re thinking, Scott. You would I mean, if we’re going to get to the kinds of revenues that we’re looking to achieve, we obviously have to cross over 1,000 at some But I think your thinking is accurate. Yes, that’s

Paul Gudonis, Chief Executive Officer, Myomo: a good observation. It was a record quarter for pipeline adds. More of it came towards the back end of the quarter as the leads increased the second half of the quarter. And as we’ve spoken before, it’s about a four to six month revenue cycle from when we get a lead, we engage the person with our intake coordinators, then they have to go get their physicians order, the medical documents. And as Dave said, fortunately, the Part B patients turn around faster.

So that’s why we’re confident that the growth in the pipeline, and the continued growth here in Q2 should enable us to really accelerate revenue in the second half of the year.

Scott Henry, Analyst, Alliance Global Partners: Okay, great. Thank you. And then one of the numbers that kind of jumped out at me and it may just be noise was the percent authorization, the percent of the pipeline that was authorized in the quarter, that’s the $213,000,000 over the $1,482,000,000 It was about 14% conversion in this quarter. It’s typically 17% or 18%, assuming my numbers are accurate. Is that noise, do you expect that number to bounce back or is anything happening there?

Dave Henry, Chief Financial Officer, Myomo: I think that was affected by some of the things that we saw in the first quarter. So the I mentioned sort of the back end loading of pipeline adds, if you will, which then, they didn’t have time to convert and bill authorizations and orders. And then also the pipeline is growing because more and more Medicare Advantage patients were having to fight. And so that’s having effect on that authorization rate as well. I mean, the first time authorization rate in Medicare Advantage is, it used to be somewhere around the 30% range.

We’re now bouncing around, probably less than half of that. That’s just reflective of what Medicare Advantage is doing and trying to manage utilization. I mean, you saw UHC’s first quarter results as an example, they’re the largest Medicare Advantage insurer and they had a crummy quarter. So, that’s I think that’s something that everybody who is everybody in healthcare not just us is dealing with.

Scott Henry, Analyst, Alliance Global Partners: Okay. Thank you for the color there. And then the gross margins,

Dave Henry, Chief Financial Officer, Myomo: how should

Scott Henry, Analyst, Alliance Global Partners: we think about Q1 going forward? Is that 67%? Is that should we expect some expansion off that, particularly as we get into those second half numbers?

Dave Henry, Chief Financial Officer, Myomo: Well, we did have some remember, we did have some cost increases. We had a full quarter of the rent in the new facility. Some of that is allocated to cost of goods sold. We also have second quarter, I would expect always slightly lower gross margin just because the volume will be a bit lower in conjunction with the revenue guidance. But then I do believe that as we get into the second half of the year, we should be approaching 70% gross margins again.

Scott Henry, Analyst, Alliance Global Partners: Okay. And then I guess the final question, when it comes to your guidance for sort of second half twenty twenty five. When you run into issues in January, February, it’s not like you’re inventorying those patients. You have to find new patients. So the fact that you’re maintaining your guidance for the year, implies pretty good trends in the second half, better than you had modeled before.

I guess the question is, are what’s your confidence level? Is it more of an optimistic number? Or do you think the trends are actually certainly the top of the funnel seems better than it has been in the past? Just trying to get your sense on Thank you.

Dave Henry, Chief Financial Officer, Myomo: I think it’s I mean, I

Scott Henry, Analyst, Alliance Global Partners: think we’re

Dave Henry, Chief Financial Officer, Myomo: we wouldn’t have reiterated it if we weren’t if we didn’t think that the guidance was achievable. The looking back in history, just to a level set everyone is that going back like last five years for our 40% or so, actually a little bit less, 40% of our revenues, full year revenues come in the have come in the first half of the year and 60% in the second half of the year. So there is already sort of that built in cadence to the business. But then add to that the fact that we are increasing our advertising spending aggressively trying to fill the top of the funnel because we’re trying to get to a higher revenue level here and toward that guided range. So those factors, think, just what’s already built into the business just based on the way it typically runs plus what we’re trying to do on top of that, I think that should give confidence to the fact that the full year numbers are still achievable.

Scott Henry, Analyst, Alliance Global Partners: Okay, great. Thank you for taking the question.

Dave Henry, Chief Financial Officer, Myomo: Sure. Thanks, Scott.

Conference Operator: Our next question will come from Anthony Vendetti with Maxim Group. Please go ahead.

Anthony Vendetti, Analyst, Maxim Group: Thank you. So I saw that you’re up now at around 300, orthotists. And I guess how is that maybe explain to us how that’s going to help drive your pipeline backlog? And then if you could talk about the MyoPro certification classes and also how that’s going to be additive to the process?

Paul Gudonis, Chief Executive Officer, Myomo: Well, thanks Anthony. One of our big initiatives this year is to build this orthotics and prosthetics channel. They’re now interested because of the Medicare reimbursement. So we have done the initial training. As I said, we’ve grown it to now approximately 300 of these CPOs around the country, different independent clinics at Hanger clinical locations and so on.

And that enables them to start doing patient evaluations. Now that we’ve launched the MyoPro 2X, we’re doing these in-depth certification classes. So for example, our team, was in Georgia, Tennessee and New Jersey this week meeting with clinical practices. It’s several days of hands on training. They bring in their own patients.

These patients get evaluated with the MyoPro, with the Mark units as well. And then they go through the reimbursement process in the hands of the O and P clinic. So the certification classes have begun and we’ve got a busy roster over the next several months. Every week we’re out training more of these and once they’re fully certified, then they can really run on their own. Then they can go recruit their own patients.

They can evaluate them, and all the reimbursement paperwork and then place orders for the MyoPro 2X. So that’s been part of our plan to really build a robust distribution channel here. Now where we’ll see the revenue growth in the second half of the year, just because they have that same revenue cycle timing that we do from the time they engage a patient to when they get the insurance authorization, they place the order and then they can deliver the device to the patients.

Anthony Vendetti, Analyst, Maxim Group: Okay, great. And then just one last follow-up on the insurance side. Can you talk about conversations you’re having with new insurance companies, conversations with employers, anything along those lines that you can update us on?

Paul Gudonis, Chief Executive Officer, Myomo: Back at our March call, mentioned that we had about 18,000,000 lives under contract or pending, and it’s now up to 25,000,000. So we’ve made progress with those. We are limited by these contracts to make any type of public announcement of who they are. But I can just say that most of them are a number of these state, Blue Cross Blue Shield plans. And we’re also in negotiations, discussions, with several of the national plans.

It takes a while. You have to get a meeting with the medical director, present the research, show them that Medicare covers this and for the federal regulations, they have to offer, to their beneficiaries, what Medicare covers and make those cases. We continue to take more and more of these cases to ALJ hearings. We’re winning a higher percentage of those and then that puts more pressure on these insurance companies to basically comply with the federal regulations, that they cannot just outright deny something, that Medicare is already covering for the Part B beneficiaries. And, as it’s been pretty widely reported in the press, the DOJ, the OIG, CMS and even Congress, is addressing this whole prior authorization issue with these insurance companies.

As far as your question about employers, we really don’t go directly to the employers. We do have a contract with one of the major workers’ compensation plans that works with employers. But other than that, we really work with the payers who then they have their contracts with the employers.

Anthony Vendetti, Analyst, Maxim Group: Right. Okay, great. But that seems like some significant covered lives that you’ve added.

Paul Gudonis, Chief Executive Officer, Myomo: Yes. And as I mentioned, like Sandra, the woman I talked to recently, she was covered by one of these Blue Cross Blue Shield plans, Medicare Advantage, that has now come along into contract with us.

Anthony Vendetti, Analyst, Maxim Group: Okay, great. Thanks for that color. I appreciate it. I’ll hop back in the queue.

Conference Operator: Our next question will come from Sean Lee with H. C. Wainwright. Please go ahead.

Sean Lee, Analyst, H.C. Wainwright: Hi, good afternoon and thanks for taking my question. I just have one on the OMP channel. I was wondering, since it’s been growing at a brisk pace, was wondering if you can provide a bit more color on what are some of the pushes and pulls we can consider in that channel? And do we expect this growth to continue into the second half of the year? Thanks.

Paul Gudonis, Chief Executive Officer, Myomo: Well, for the O and P for clinics, this is the largest what I call white space opportunity in the O and P industry, because overall this industry is a pretty slow growth industry. It used to be about 1% to 3%. And so the MyoProbe with chronic arm paralysis patients is a huge opportunity for them. There’s good reimbursement, good margin for them. And it meets their clinical desire to improve patients’ lives.

So, that’s the upside to the clinics. On the other hand, just like other healthcare providers, they’re busy. They’re understaffed. They’ve got to take time out of their billable work to get all the certification training. But overall, it’s a good investment.

And at our upcoming Investor and Analyst Day, we hope to hear some testimonials from some of the O and P clinics about how this is really important to their patients and their practice.

Sean Lee, Analyst, H.C. Wainwright: Great. Thank you.

Conference Operator: And our next question will come from Edward Wu Please go ahead.

Dave Henry, Chief Financial Officer, Myomo: Yes, congratulations on the quarter. My question is on international. It looks like you’re doing relatively well in Germany. Has there been any consideration to try to increase investments there to ramp it up as quickly as you are ramping up right now in The U. S?

Paul Gudonis, Chief Executive Officer, Myomo: Thanks, Ed. Yes, in fact, we are adding to our German team because that business has grown year over year as you’ve pointed out. So we’ve added to the team, we’re adding to our social media advertising there. We’re recruiting more O and P clinics, more conferences with neurologists and other clinicians. So we expect another year of strong growth and profitability from that business out there in Germany.

As for other international markets, we get inbounds from potential distributors in other countries. We look to see how committed they are, what the regulatory situation is, are they willing to make the investment to buy a startup kit and so on. So we are not aggressively pursuing that at this time. We have such a big opportunity both in The U. S.

And Germany that those are our key markets right now.

Dave Henry, Chief Financial Officer, Myomo: Great. Thanks for answering my questions and I wish you guys good luck. Thank you.

Paul Gudonis, Chief Executive Officer, Myomo: Thanks, Robert.

Conference Operator: This concludes our question and answer session. I would like to turn the conference back over to Paul Gudonis, Chief Executive Officer for any closing remarks.

Paul Gudonis, Chief Executive Officer, Myomo: Thanks, operator. Well, before we wrap up, I just want to remind everyone that we’ll be hosting our first ever Investor and Analyst Day event here on June 18, which will be held at our new facility in Burlington, Massachusetts. We hope you’ll join us to see our operations, meet members of our senior leadership team, and learn more about the MyoPro and the impact that Myomo is having on patients. So if you’d like to attend, please register online or contact our CFO, Dave Henry or Turf Patel, Alliance Advisors IR, we can reserve a spot for you. And the event will also be available via webcast.

But we hope to see you then. And again, have a good evening and look forward to speaking with you again in August, as well as during the June 18 investor presentation. Thanks and have a good night.

Conference Operator: The conference has now concluded. Thank you for attending today’s presentation. You may now disconnect.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.