Earnings call transcript: Myomo Q4 2024 beats forecasts, shares surge

Myomo Inc. reported its fourth-quarter 2024 earnings, surpassing expectations with an EPS of -$0.01 against a forecast of -$0.02, and revenue of $12.1 million compared to the anticipated $9.9 million. The positive earnings surprise led to a significant 26.38% surge in Myomo’s stock price during aftermarket trading, closing at $5.27. According to InvestingPro data, the company maintains a healthy current ratio of 2.1, indicating strong short-term liquidity position.

Key Takeaways

• Myomo’s revenue and EPS both exceeded forecasts for Q4 2024.
• The company achieved its first positive Adjusted EBITDA of $200,000.
• Stock price increased by 26.38% in aftermarket trading.
• Revenue guidance for 2025 suggests continued strong growth.
• Expansion in Medicare and international markets supports future prospects.

Company Performance

Myomo demonstrated a robust performance in Q4 2024, with a 154% year-over-year increase in revenue to $12.1 million. The company also reported a net loss of $300,000, a significant improvement from the $2.5 million loss in the same quarter the previous year. The achievement of positive Adjusted EBITDA marks a milestone, reflecting enhanced operational efficiency.

Financial Highlights

• Revenue: $12.1 million, up 154% YoY.
• Net Loss: $300,000, improved from $2.5 million in Q4 2023.
• Gross Margin: 71.4% in Q4 2024.
• Adjusted EBITDA: $200,000, first-time positive.

Earnings vs. Forecast

Myomo’s actual EPS of -$0.01 outperformed the forecast of -$0.02, while revenue of $12.1 million exceeded the projected $9.9 million. This represents a revenue surprise of over 22%, highlighting the company’s strong sales performance and operational improvements.

Market Reaction

Following the earnings announcement, Myomo’s stock experienced a 26.38% increase in aftermarket trading, closing at $5.27. This surge reflects investor confidence in the company’s ability to sustain growth and improve profitability, especially in light of the positive earnings surprise and optimistic guidance. InvestingPro analysis shows analyst price targets ranging from $6 to $9, suggesting potential upside from current levels. The stock has shown considerable volatility, with a beta of 1.6, making it more responsive to market movements than average.

Outlook & Guidance

For 2025, Myomo projects revenue between $50 million and $53 million, representing a growth rate of 54% to 66%. The company expects revenue to be weighted towards the second half of the year and aims for positive operating cash flow by Q4 2025. Increased advertising spend and strategic market expansion are key components of their growth strategy.

Executive Commentary

Paul Gudonis, CEO, described 2024 as a "transformational year for Myomo," emphasizing the company’s leadership in the robotic orthotics market. CFO Dave Henry highlighted the expected "meaningful growth in the O&P channel in 2025," underscoring the company’s strategic focus on expanding its market presence.

Risks and Challenges

• Potential hurdles with Medicare Advantage claim denials.
• High R&D and marketing expenses could impact profitability.
• Market competition and technological advancements require continuous innovation.
• Economic uncertainties may affect consumer spending and healthcare budgets.

Q&A

During the earnings call, analysts inquired about Myomo’s strategy to address challenges with Medicare Advantage claims and the company’s plans to engage more effectively with physicians and O&P clinics. Executives also discussed pipeline expansion and marketing efficiency improvements, aiming to enhance market penetration and revenue growth.

Full transcript - Myomo Inc (MYO) Q4 2024:

Conference Operator: Good afternoon, and welcome to the Myomo Fourth Quarter twenty twenty four 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 Tirth Patel.

Please go ahead.

Tirth Patel, Investor Relations, Alliance Advisors, Alliance Advisors: Thank you, operator, and good afternoon, everyone. This is Tirth Patel with Alliance Advisors IR. Welcome to the Myomo fourth quarter and full year twenty twenty four 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 conference 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 certain risks and uncertainties and other factors that may affect Myomo’s business, financial condition and operating results. These and additional risks, uncertainties and other factors are discussed in Myomo’s filings with the Securities and Exchange Commission, including on Forms 10 ks and 10 Q. Actual outcomes and results may differ materially from what’s expressed in or implied by these forward looking statements. 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, 03/10/2025.

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

Paul Gudonis, Chief Executive Officer, Myomo: Thanks, Terrence, and good afternoon, everyone. Thanks for joining us. 2024 was a transformational year for Myomo, capped off by a milestone fourth quarter as we generated record financial and operating results by capitalizing upon market access for patients covered by Medicare Part B. After several years of discussions with CMS staff and medical directors, Medicare began paying for the MyoPro powered arm brace for medically qualified patients beginning April one of last year. This resulted in an inflection point for our business as we gained the ability to serve roughly 50% of the market that we had previously turned away.

During our last quarterly conference call, I laid out three major objectives for the company. One, to start providing the MyoPro to eligible standard Medicare Part B beneficiaries. Two, to engage the many orthotics and prosthetics clinics across the country who because of the CMS decision would now be interested in becoming a distribution channel for us and three, begin the process of establishing contracts with payers for in network status of our direct provider business. I added two other objectives to support our growth plans and create a profitable business here. Increase our capacity from our call center to manufacturing operations and clinical reimbursement staff to enable continued volume and revenue growth in 2025 and beyond and to achieve cash flow breakeven by the end of the year as our revenue scaled up.

Today, I’m delighted to share the progress we’ve made on each of these objectives starting with a review of our Q4 accomplishments and full year results. Revenues were $12,100,000 for the fourth quarter and $32,600,000 for the full year, more than double the quarterly revenue in Q4 ’twenty three and sixty nine percent higher revenue than the previous year. We delivered two twenty revenue units in the quarter, double the volume of Q4 ’twenty three and more than 600 devices during the year. We’ve now provided MioMol products to more than 3,000 patients and hospital customers, solidifying our position as the market leader in the upper extremity of paralysis category. During Q4, we added six fifty seven medically qualified candidates to our patient pipeline and we ended the year with a record number of nearly 1,400 patients in the process of obtaining MyoPro.

A record two thirty three MyoPros were authorized and ordered in Q4 with more than 140 of them covered by Medicare in our direct provider channel. With greater clarity on reimbursement, we built a team of business development specialists and clinical trainers to engage these O and P clinics and this effort exceeded our expectations with 160 certified prosthesis orthopedists trained, far outpacing our goal of 100. These CPOs can now begin assessing patients and building their own MyoPro pipelines. One sign of progress in establishing this new channel is that our O and P revenue grew to $600,000 in Q4, up 94% sequentially as more OMP clinics began the process of becoming a MyoPro center of excellence. Our international business, which is primarily sales via OMP providers in Germany, performed well in the quarter, again generating over $1,000,000 in profitable revenue and over $4,000,000 for the full year.

Our China JV is working on a clinical trial to obtain regulatory approval to begin selling the Myomo products to patients and hospitals later this year. Moving out the OMP distribution channel is a critical part of our long term strategy. While Myomo’s direct provider model allows us to work directly with patients and insurers, the OMP channel provides a scalable way to expand reach and drive adoption through an established clinical network. The demand from OMP clinics is increasing as they recognize MyoPro as a complementary solution for their patient base. We’re supporting these partners through several methods, hands on clinical training and certification.

As I mentioned, we exceeded our initial goal by training 160 CPOs in 2024 and we expect to further scale this effort in 2025. With improved reimbursement clarity, greater understanding of Medicare coverage has led OMP clinics now having a clearer pathway to secure payment for the MyoPro. And through dedicated field support, we’ve deployed a team of business development specialists and clinical trainers to help O and P clinics onboard patients navigate reimbursement optimized delivery processes. Although this channel is still in its early stages, we expect O and P driven revenue to increase meaningfully in the second half of twenty twenty five as more clinics begin generating orders. Importantly, the high touch nature of OMT clinics is that patients can receive in person evaluations, measurements and fittings leading to a convenient adoption process.

While reimbursement for patients covered by standard fee for service Medicare Part B is going well, we still see too many patients being denied AmyaPro by Medicare Advantage and other commercial payers. The situation has not improved over the last three to six months and reflects the same reality other healthcare providers face with these payers. Our Chief Medical Officer and Legal Counsel will continue to make the case for coverage by engaging with payer medical directors and by advocating for patients by filing appeals and taking denials all the way to administrative law judge hearings where we’ve been successful in making the case for medical necessity and a favorable ruling for the patient’s Myopro. On the payer front, my third objective for the business was to enter into contracts with health insurance plans so that Myomo can be an in network provider with our direct billing business. We continue to make progress obtaining payer contracts.

Since our third quarter call, five new contracts have been entered into or in the final stages of taking effect. These new contracts are primarily state Blue Cross Blue Shield plans and altogether we now have signed and pending contracts covering approximately 18,600,000 lives. As for the two additional goals I set for the company, here’s how we’ve done. We relocated operations from Downtown Boston to a new 35,000 square foot facility in Suburban Burlington. We increased our manufacturing capacity to 120 units per month, more than doubling since the beginning of 2024.

This enables us to reduce MyoPro revenue units, clinical evaluation units and the demo units we need to support our growing internal staff and the O and P channel. We also hired 100 people during the past year, bringing our year end headcount to 190, and we plan to continue hiring to expand capacity to serve a larger number of patients this year. I’ll wrap up by pointing out that we overachieved in our fifth objective to become operating cash flow breakeven by Q4 and we completed a successful capital raise to fund our growth plans in 2025 and beyond. I’ll now let our CFO, Dave Henry, provide the details on these financials. Dave?

Dave Henry, Chief Financial Officer, Myomo: Thank you, Paul, and good afternoon, everyone. Let me start my remarks with a review of our fourth quarter financial results. Revenue for the fourth quarter of twenty twenty four was a record $12,100,000 This represents a 154% increase versus the prior year quarter and was driven by a higher number of revenue units and a higher ASP. I note that revenue for both periods consisted entirely of product revenue. Our growth was fueled by record revenues from patients with Medicare Part B coverage and record international revenues.

We delivered a record two twenty MyoPro revenue units units during the quarter, up 106% year over year, reflecting the higher velocity of revenues, particularly from patients with Medicare Part B. A record 78 revenue units came from authorizations and orders received in fourth quarter. Our average selling price or ASP increased 24% versus the prior year to approximately $54,900 This figure is down slightly from the atypically high ASP in third quarter. Medicare Part B patients represented 57% of total revenue in fourth quarter, up from 55% of revenue in third quarter, highlighting our continued success in educating this patient population. Medicare Advantage revenue grew 4% year over year representing 22 of fourth quarter revenue, but we continue to face challenges with first time authorizations and denials.

The Medicare Advantage appeals process remains slow and frequently requires us to escalate cases to administrative law judge hearings. To address these hurdles, we are strengthening our payer engagement strategy, advocating for expanded coverage with medical directors and collaborating with trade groups regarding coverage deficiencies by Medicare Advantage organizations. For Medicare Part B and certain commercial payers are recognizing revenue at the time of MyoPro delivery and the amount expected to be paid by both the primary and supplemental insurance payer with the exception of Medicaid. Medicare Advantage payers are in most cases now reimbursing us based on the fees published by CMS. Encouragingly, 90% of our fourth quarter product revenue was recognized at either shipment or delivery compared with 79% in the fourth quarter of twenty twenty three, reflecting a more predictable revenue cycle as reimbursement processes become more established.

81% of our revenue in the fourth quarter came from the direct billing channel compared with 65% in the prior year quarter. International revenue is a record $1,500,000 in the fourth quarter, representing 12% of quarterly revenue primarily from Germany. In the fourth quarter of twenty twenty four, both pipeline additions and the total pipeline reached new records. The pipeline stood at thirteen eighty nine patients at the end of the fourth quarter, an increase of 33% year over year. In fourth quarter alone, we added a record six fifty seven new patients, which is up 72% from the prior year’s fourth quarter.

’30 ’3 percent of fourth quarter pipeline additions were Medicare Part B patients and 18% of the quarter end pipeline for Medicare Part B patients. This reflects the increased velocity in moving Medicare patients through the process of attaining MyoPro as compared with payers that require pre authorizations. 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 deemed qualified for delivery based on our inclusion criteria. We ended the quarter with backlog of two seventy two patients, up eighteen percent versus the prior year. This includes 101 Medicare Part B patients that have been qualified for delivery with appropriate medical documentation.

Contributing to our backlog, we’ve received a record two thirty three authorizations and orders during the fourth quarter, an increase of 27% year over year. Gross margin for the fourth quarter of twenty twenty four was 71.4% compared with 65.3% for the prior year quarter. The increase was driven primarily by a higher ASP and higher fixed cost absorption. Total operating expenses for the fourth quarter were $8,900,000 up 60% over the fourth quarter of twenty twenty three. This increase was driven primarily by higher headcount throughout the organization as we increased capacity, higher R and D expenses and higher incentive compensation accruals.

Advertising expense declined 6% year over year to about $800,000 reflecting typical fourth quarter cutbacks. Cost per pipeline ad fell 46 to $12.24 dollars reflecting greater efficiency and performing initial patient evaluations. Operating loss for the fourth quarter narrowed to $200,000 compared with a $2,400,000 operating loss in the prior year quarter. Net loss for the fourth quarter of twenty twenty four was $300,000 or $0.01 per share. This compares with a net loss of $2,500,000 or $0.07 per share for the fourth quarter of twenty twenty three.

Approximately $7,100,000 pre funded warrants are still outstanding from our authorings in 2023 and January 2024. These pre funded warrants are considered common stock equivalents under GAAP and are included on our weighted average shares outstanding. A highlight for the quarter was achieving positive adjusted EBITDA, which we reached for the first time in our history. Adjusted EBITDA was about $200,000 a significant improvement compared with a negative $2,100,000 for the fourth quarter of twenty twenty three. Looking at our full year financial results, revenue for 2024 totaled $32,600,000 dollars up 69% in 2023.

Excluding license fees in 2023, product revenue increased 86%. Our gross margin in 2024 was 71.2%, up from 68.5% in 2023. Excluding license fees, gross margin on product revenue was 65.3% in 2023. Operating expenses for 2024 were $29,400,000 an increase of 37% compared with 2023. Operating loss for 2024 was 6,200,000 versus an operating loss of $8,200,000 in 2023.

Net loss was $6,200,000 or $0.16 per share and this compares with a net loss of $8,100,000 or $0.28 per share for 2023. Adjusted EBITDA improved to a negative $5,100,000 for 2024 compared with a negative $7,000,000 for 2023. Turning to our balance sheet and cash flows, a key financial milestone for 2024 was achieving positive operating cash flow breakeven in fourth quarter. I’m pleased to report that we achieved that objective of $3,400,000 in cash from operations in the fourth quarter and free cash flow of $2,500,000 We define the latter as cash provided by operations less capital expenditures. Cash, cash equivalents and short term investments as of 12/31/2024 were $24,900,000 Additionally, we maintain a $4,000,000 accounts receivable credit line which is currently on draw.

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. We believe our cash and cash equivalents are sufficient to fund our operations for at least the next twelve months. Looking ahead, our financial guidance for 2025 reflects expectations for continued strong growth and further strategic investments in scaling operations. Q1 revenue is expected to be between $9,000,000 and $9,500,000 reflecting typical seasonality, yet expected to be up 140% to 153% over the prior year.

For the full year, we’re introducing guidance for 2025 revenue to be $50,000,000 to $53,000,000 representing growth of 54% to 66% over 2024. The proceeds from our financing in December 2024 are being invested in growing our direct provider channel which we control while we work on accelerating revenue growth in the OMP channel. We expect to nearly double our advertising expenses in 2025 to over $6,000,000 and to hire additional personnel in our clinical reimbursement and operations functions to help us serve a larger number of patients. Patients obtained through our higher advertising budget are not expected to generate revenue until the second half of twenty twenty five. So our revenue profile is expected to be weighted toward the second half of the year compared to the first half.

From a cash standpoint, we expect negative cash flows in the first three quarters of twenty twenty five, the second quarter being the highest burn quarter due to incentive compensation payments. However, should we meet our revenue objectives, we anticipate a return to positive operating cash flow by fourth quarter twenty twenty five. With that financial overview, I’ll turn the call back to Paul.

Paul Gudonis, Chief Executive Officer, Myomo: Thanks, Dave. Omaiomo is at the forefront of a new and expanding category robotic orthotics for upper limb paralysis. With over 3,000 patients served, we are the clear leader in this space and several factors strengthen our position. First, our proprietary myoelectric control system allows users to regain our mobility based on their own neural signals, offering level functionality that traditional static wear BOCES can’t match. Second, our multi channel marketing strategy, which spans direct billing, O and P clinics and international distribution, creates a broad footprint that’s difficult for new entrants to replicate.

The regulatory approvals, commercial operations, reimbursement traction and clinical expertise we have built give us a strong first mover advantage. Lastly, our commitment to innovation ensures that we stay ahead. We’re actively investing in R and D to build the next generation MyoPro platform that will improve functional capabilities and open new patient populations in the future. For these reasons and more, we believe Myomo is well positioned to sustain its leadership as this market grows. As we look ahead, several key growth drivers position us for continued success.

Demand for Medicare Part B and Medicare Advantage beneficiaries is expected to increase with more awareness, while O and P adoption will accelerate as more clinics complete training and establish their own myoprol patient pipelines. We are increasing efforts to educate more patients, families and clinicians about our solution for chronic arm paralysis. As Dave mentioned, we expect to nearly double our advertising spend to more than $6,000,000 this year. This should result in more leads coming to our website and call center and a growing number of new candidates entering the patient pipeline. Since it can take four to six months or longer sometimes for patients to go through the process of obtaining MyoPro, we expect our orders and revenue to grow more significantly in the second half of the year.

We also expect O and P orders to grow in the second half as more centers of excellence are trained on the MyoPro. They build their patient pipelines and go through the revenue cycle process to deliver MyoPro’s to their patients. We’re supporting these OMP clinics with more training sessions and in person support across the country. We had a very large turnout of Hanger clinicians at the educational sessions we conducted in January at Hanger’s National Clinical Meeting. This year, we’ll also benefit from a 2.4% price increase that CMS published as of January 1, bringing the Medicare allowables to $67,453 for the MyoPro G, which is over 90% of our unit volume and $34,284 for the Motion W model.

With that update and overview of our plans for 2025, we’re now ready to take your questions. Operator? And before we turn to your questions, I want to announce that we’ll be hosting our first ever Investor and Analyst Day on June 18. This event will be held at our new facility here in Burlington, Massachusetts. And among other things, it will allow for a firsthand look at our operations, as well as the opportunity to meet members of our executive team and learn about the impact Myomo is having on patients.

We’ll be announcing the details in the coming weeks. But in the meantime, if you’re interested in attending, please contact our CFO, Dave Henry or Tirth Patel at Alliance Advisors IR, who can reserve a spot for you. The event will also be available via webcast.

Conference Operator: And that first question comes from Chase Knickerbocker with Craig Hallum. Please go ahead.

Chase Knickerbocker, Analyst, Craig Hallum: Good afternoon, Paul and Dave. Congrats on the great quarter and guide here. Just first from me, can you just walk through your assumptions on unit or revenue contribution in 2025 that you assume in guidance from the O and P channel? Maybe what percentage of either of those items? And then can you just share what goals you have for that channel in twenty twenty five percent?

Is it clinicians trained like last year? Or is it ordering clinicians? Just walk us through what we should be benchmarking you to?

Paul Gudonis, Chief Executive Officer, Myomo: Well, we plan to still have more of our revenue coming from our direct provider business and we are expanding that. We recently hired a few more CPOs around the country plus other clinical support staff. And we’re investing, as I mentioned earlier, in doubling the advertising spend. So that channel, which as Dave said, we control, we manage it, that will continue to grow significantly this year. And the O and P channel will start to see already these green shoots.

We saw revenues double from Q3 to Q4 of last year. We had 160 trained clinicians at the end of the year. We’ve got more trainings already planned and ongoing. So we expect that channel will kick in, but the majority of our revenue will still come out of our direct provider channel in this coming year.

Dave Henry, Chief Financial Officer, Myomo: Yes. And I guess financially, I mean O and P revenue for this year, I would say was maybe a little over $1,000,000 somewhere in that neighborhood. And so I would we haven’t given we’re not giving specific guidance on what we think the O and P channel will look like, but we do expect meaningful growth I would say in that channel in 2025.

Chase Knickerbocker, Analyst, Craig Hallum: Got it. And then on the direct business, how quick can you ramp advertising spend? Maybe give us a look at what you kind of expect from a spend perspective in Q1. And then as we think about pipeline additions, I mean, really, really efficient marketing spend in Q4, I mean, do you expect that kind of efficiency to continue or kind of walk us through how we should think about that?

Dave Henry, Chief Financial Officer, Myomo: On the I think you asked your second question first. I think on the cost per pipeline add, I think it’s too early to tell as to whether that will continue to be a bit low. We are working through some changes that Meta made with Facebook and we’re seeing how those changes are affecting us. We call we went through this. I don’t know if you recall, but we went through this a couple of years ago.

I think right now I think things are on track from a lead generation standpoint. So we’ve worked our way through that. But we’ll see where we get to in terms of the end of the quarter. But I would expect I’m sitting here right now I think maybe you see a bit of an increase in the cost per pipeline ad here in the first quarter. But and then in terms of the pipeline ads, we’ll see where we came up.

We’ve had a decent first couple of months and we’ll see where things end up here in first quarter.

Chase Knickerbocker, Analyst, Craig Hallum: Got it. And maybe if we look at ’25 from an ASPs perspective, you’ll start to have some O and P volumes kind of work into the model in the back half of the year. But I mean any general thoughts on ASPs as we move through the year?

Dave Henry, Chief Financial Officer, Myomo: Well, you do have the impact from the higher fees, which are now filtering through all the payers and we’re seeing payments not only from CMS but also other Medicare Advantage payers based on those new published fees. So there’ll be a little bit of ASP uplift from that offset as you said from a higher mix of O and P revenue that we expect in the second half.

Chase Knickerbocker, Analyst, Craig Hallum: Got it. Thanks for the questions guys. Congrats again.

Paul Gudonis, Chief Executive Officer, Myomo: Thanks.

Conference Operator: The next question is from Scott Henry with AGP. Please go ahead.

Scott Henry, Analyst, AGP: Thank you. Good afternoon. Great results and a great outlook for 2025. Congratulations to you guys. Quite an accomplishment.

A couple of questions. When we look at the model and we look at the metrics to grow from $12,000,000 to even higher revenue per quarter, There’s a couple of ways it can go up. One of them would be pipeline adds. Do you think June, are you starting to get near the peak or do you think there’s other step ups, you can get into the 700s, maybe the 800s? How should we think of the potential for the top of the funnel there?

Dave Henry, Chief Financial Officer, Myomo: Well, I think to get to the $50,000,000 to $53,000,000 in revenue, we have to increase the pipeline adds so low. We don’t think we’ve reached our peak. And I think we’ve gotten we’ve got a very efficient organization I think that we’ve built now. You know, we have now separate people in the organization that all they do is these initial valuations of patients to get them into the pipeline. We try to encourage as many patients as possible to get into the, you know, we have an online waiting room, a doxy waiting room that we use quite extensively.

And so we’re getting pretty good at it. That frees up our regional CPOs to be out there in the field doing shape captures and delivering mile pros as basically their entire jobs. So we’re becoming much more efficient at it and then with the higher lead generation that we expect with more dollars that we spend that should result in more patients coming into the top of the funnel beyond what we’ve been able to add here so far. And Scott, I’ll add that it’s a very deep pool

Paul Gudonis, Chief Executive Officer, Myomo: of patients, right? Over three million cases of chronic arm paralysis in The U. S. And if it’s just ten percent or twenty percent of them that are eligible candidates for Omiofil, it’s still hundreds of thousands of patients. And so, we’re expecting to see continued linear growth in the number of patient candidates finding out about us as we increase the advertising spend.

And the other thing that’s working in our favor is the rehab therapists that are now starting to work with MyoPro patients after the patient gets their device, they have to go through recent training with the MyoPro. They are now seeing patients that could be a candidate and referring them to us as well. So we’re starting to see that momentum happen too.

Scott Henry, Analyst, AGP: Okay, great. And shifting to gross margins, I think they’re around 75% in Q3, ’70 ’1 percent in Q4. As you get to this higher volume, a little higher price point as well, how should we think about 2025? Does it look more like Q3 or Q4 or somewhere in the middle?

Dave Henry, Chief Financial Officer, Myomo: Yes, I would expect that, we’re in the new facility now, so we have a bit more overhead. And, but that is being offset by some but I think a higher ASP opportunity. So I think that, you know, that 70%, seventy one % ish kind of gross margin would be something that I would be modeling for 2025.

Scott Henry, Analyst, AGP: Okay, great. And then when we think about OpEx, I mean, just looking at the numbers and hearing the commentary, should we be thinking about kind of $10,000,000 a quarter in OpEx that’s all in including stock comp, those are as reported? Or could it be higher than that? Just trying to get some

Dave Henry, Chief Financial Officer, Myomo: Yes. I mean, I think it could be higher than that. I think full year OpEx definitely starts with a four.

Scott Henry, Analyst, AGP: Okay. Great. That’s helpful. Final question, more of a big picture question. When you think about the reimbursement environment, which tremendous strides in 2024, When we look at 2025, would you categorize it as consistent or even improving over 2024 or perhaps getting a little worse than 2024?

Just trying to get a sense of whether that’s a headwind or a tailwind.

Paul Gudonis, Chief Executive Officer, Myomo: Right now, I’m looking at it as being consistent, certainly with the Medicare Part B allowables plus this price increase. The fact that we’re now entering into contracts in several states with some of the blues, there is a defined price based off of the Medicare allowable, which means that those patients will be covered and we we don’t have to go through the process of obtaining a single case agreement like we had in the past. So that should accelerate the revenue cycle on the patients that have those plans. And then hopefully, with all the public pressure, there’s government investigations of these Medicare Advantage plans, that pressure may improve that environment to get back to where we were with these Medicare Advantage plans a couple of years ago.

Scott Henry, Analyst, AGP: Okay, great. Thank you for the color. Thanks for taking all the questions. Great results. Thanks, Ed.

Thanks. Thanks, Scott.

Conference Operator: The next question is from Anthony Vendetti with Maxim Group. Please go ahead.

Anthony Vendetti, Analyst, Maxim Group: Thanks. I was wondering do you have the cost per pipeline add?

Dave Henry, Chief Financial Officer, Myomo: Yes, it was $12.26 dollars 12 20 6 dollars Okay, great.

Anthony Vendetti, Analyst, Maxim Group: And then I’m just curious, obviously a lot of companies deal with this denied claims, right? And then there’s appeal process, recovery process. What percent of denied claims are you able to recover over time?

Dave Henry, Chief Financial Officer, Myomo: Denied so denied claims like, we file an authorization request, not even a claim, but most of the dials come at the authorization stage. Yeah. Okay. Sure. Yeah.

Let’s say, we initially

Anthony Vendetti, Analyst, Maxim Group: the authorization was initially denied, and you go back and appeal or you try to make the medical necessity case, what percent of those do you get overturned?

Paul Gudonis, Chief Executive Officer, Myomo: Well, historically, we had been winning about forty percent to 50% of those over time. That percentage has come down somewhat. But the time has also been lengthened. I mean, I’ve recently met a patient who’s been in the pipeline for over two years before he finally got his approval of his MyoPro. So that timeline can stretch out.

That’s why we’re pleased that we’re able to serve these Medicare Part B patients more readily right now.

Dave Henry, Chief Financial Officer, Myomo: Okay.

Anthony Vendetti, Analyst, Maxim Group: And then in terms of just getting physicians comfortable, do you have specific physician training goals for ’25?

Paul Gudonis, Chief Executive Officer, Myomo: Well, what we do is when a patient is qualified for MyoPro, we send them to their physician. They have to have an evaluation by the physician, and get all the clinical documentation, get a prescription and so on. At that point, we will send that physician one of our MyoPro brochures. We make them knowledgeable about the fact that there’s this clinical research available. And one of our either local clinicians or our Chief Medical Officer will reach out to that physician to educate them about the MyoPro.

We’re also starting to attend more of the conferences that physicians attend. These are rehabilitation medicine physicians and others. So we’re getting the word out that way with a lot more speaking engagements as well.

Anthony Vendetti, Analyst, Maxim Group: Okay, great. And then this is probably more of a financial follow-up. So you said you’re going to at least double the advertising budget to $6,000,000 this year. Did you say CapEx overall should be greater than $10,000,000 for 2025? And if not, if you could

Dave Henry, Chief Financial Officer, Myomo: just clarify? Oh, no, no. Yeah, no. CapEx will be fairly low. We had CapEx recently over the last quarter or ’2 just because of our move to the Burlington facility here.

We had to furnish it and things like that. But there’ll be some smaller amount of CapEx as we move into the last 7,500 square feet here in Burlington by midyear. But overall, I would not expect CapEx to be it’s not I would think it, you know, dollars 1,000,000 or less for CapEx.

Anthony Vendetti, Analyst, Maxim Group: Oh, okay. Okay. So you’re going to up the advertising budget to around $6,000,000 but the move is largely done. So CapEx for $25,000,000 around $1,000,000 Got it.

Dave Henry, Chief Financial Officer, Myomo: Yeah. Yeah. Except, like I said, except for the last 7,500 square feet that we’ll furnish and equip in mid

Anthony Vendetti, Analyst, Maxim Group: year.

Conference Operator: The next question is from Sean Lee with H. C. Wainwright. Please go ahead.

Sean Lee, Analyst, H.C. Wainwright: Thank you and good afternoon Paul and Dave and congrats on a great quarter and year. For my first question, I just wanted to dig in a little deeper on the really burn story front. So for the authorization denials, what are the main reasons that you’re seeing for these denials? And is there anything that the company can do to reduce their frequency?

Paul Gudonis, Chief Executive Officer, Myomo: So the main reasons for denial and insurance company will present is, they’ll say, well, device is experimental and investigational. And we knocked that down because we said, look, we’ve already had 3,000 of these units paid for CMS. It has approved this device for coverage. So obviously, it’s not experimental investigational. The VA has approved the device for ten years now.

The other one would be medical necessity. And that’s why we depend on the physician’s medical documentation, pointing out that this is reasonable and medically necessary for these patients based on their chronic arm paralysis. They tried everything else, occupational therapy, maybe Botox, other interventions. And this is the least costly, most functional option at this point. And many of these insurance plans will pay for an arm prosthesis.

So if you were an amputee and you lost an arm or a hand, those policies will cover that type of device to restore function. The MyoPro does the same thing without having to have the amputation. In fact, we save some arms from amputation because the patient has discovered a MyoPro. So that’s how we try to knock down those arguments. Our Chief Medical Officer, Doctor.

Kogelman has meetings with these medical directors to make the case and will testify in front of our ALJ judges to make that case and we win a number of those cases.

Sean Lee, Analyst, H.C. Wainwright: Great. Thanks for the additional color. With regards to the O and P channel for 2025, what sort of growth can we expect from that versus compared to your traditional advertising?

Dave Henry, Chief Financial Officer, Myomo: Yes, we mentioned I think I answered this question a little bit earlier. I mean, the O and P channel was about somewhere in the neighborhood of $1,000,000 give or take a few hundred thousand in 2025. And we expect we’re not giving specific guidance for that channel in 2025, but we expect the growth in that channel to be meaningful in 2025.

Sean Lee, Analyst, H.C. Wainwright: I see, I see. Thanks. And my last question is, on the international market, how should we think about that in 2025?

Paul Gudonis, Chief Executive Officer, Myomo: Well, Germany has performed very well. Many of the statutory health insurance plans there are covering the MyoPro. We have over 100 owned peak clinical partners trained and up and running around the country. So our German team has had a steady track record of growth year over year. They’re expanding their marketing.

They’re expanding their clinical staff and business development staff. So we should see that market continue to grow. And we continue to invest in Germany. Opening other international markets is more time consuming, a couple of years of investment to get reimbursement just like we had to invest here in The U. S.

And in Germany. So our approach is at this point, let’s keep doing what’s working, which is growing the German market to over 80,000,000 population. So that means there’s over eight hundred thousand paralyzed arms in the country. And again, we’re just in early stage of penetrating that very large market. It’s a good economy overall despite some near term turbulence here, but they like high-tech products and they’ve got a very good healthcare system.

Sean Lee, Analyst, H.C. Wainwright: Great. That’s all I have. And thanks again for taking my questions.

Paul Gudonis, Chief Executive Officer, Myomo: Thank you, Sean.

Conference Operator: The next question is from Edward Wu with Ascendiant Capital. Please go ahead.

Dave Henry, Chief Financial Officer, Myomo: Yes. I also like to give my congratulations on a great quarter and keep it up. My question is on the tariffs. Are there any risk to your 70%, seventy one % gross margin with possible tariffs? And also, will the tariffs impact your sales into Germany?

Paul Gudonis, Chief Executive Officer, Myomo: Right now, I asked our supply chain team to look at this. We don’t see any impact on the tariffs for what we purchased right now. Most of it is sourced from The U. S, a little bit of small low cost components from China, but so that should be de minimis and so on. Right now, there are no tariffs coming back at us for our exports to Germany, but it could raise the price to the O and P providers there in Germany, which they may be able to mark up to the insurance companies.

That’s still to be determined. And as you know, the tariffs are on one day, they’re off the next day.

Dave Henry, Chief Financial Officer, Myomo: That sounds good. Well, thanks for answering my questions. Wish you guys good luck. Thank you.

Paul Gudonis, Chief Executive Officer, Myomo: All right. Thank you, Evan. This

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

Paul Gudonis, Chief Executive Officer, Myomo: Well, thank you, operator. Well, I want to thank the Myomo team here in The United States and in Germany, our growing network of O and P clinical partners, the rehab hospital therapists who help patients regain mobility and our investors who support our mission in making this life changing technology available to a large patient population that had been previously told that you will never use that arm again for the rest of your life. I’ll close with a case study of one of our MyoPro recipients that was provided to me by Mark Warner of the RISE O and P, a center of excellence in Arizona about one of his Medicare Part D patients. He recently fit a 58 year old male who has suffered a stroke twelve years ago, which affected his right dominant arm. His husband and father of two children was not able to find employment following his stroke, forcing him to take on the role of Mr.

Mom instead. Since being fit with his MyoPro G, he’s made tremendous gains. He’s regained increased active range of motion in his right elbow and hand, as well as his right shoulder. After two months of using his MyoPro, his increased strength as such that he can now carry a bag and perform other household tasks with his right arm. He’s also experienced reduced spasticity and tone in his right arm from using his MyoPro, enabling him to return to jogging on a treadmill at his gym as a result of the restoration of reciprocal arm swing.

The success with his MyoPro and his desire to help other people with armed disabilities has now led to his new role as a MyoPro ambassador for Arise OMP. The stories like this that drive us forward by continuing to serve more individuals directly and through our partner OMP clinics will keep building a growing and profitable company. Thanks again for joining our call today and have a nice evening.

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

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