Myomo at Needham Conference: Strategic Growth and Market Expansion

On Thursday, 10 April 2025, Myomo Inc. (NYSE: MYO) participated in the 24th Annual Needham Virtual Healthcare Conference, highlighting its strategic initiatives to address upper limb paralysis through its MyoPro device. The company emphasized its growth potential, driven by CMS reimbursement and international expansion, while acknowledging upcoming challenges like increased R&D expenses.

Key Takeaways

• Myomo's mission is to address upper limb paralysis with its MyoPro device, benefiting from CMS reimbursement expansion.
• The company reported record Q4 2024 revenue of $12.1 million, with a gross margin of 71%.
• Myomo projects a 54% to 63% revenue growth in 2025, aiming for $50 to $53 million.
• The company plans to double R&D spending to accelerate product development.
• A joint venture in China could generate $10.75 million in license fees over ten years.

Financial Results

• Q4 2024 Revenue: $12.1 million, marking a record for the company.
• Full Year 2024 Revenue: $32.6 million.
• Q1 2025 Revenue Guidance: $9 million to $9.5 million, more than doubling year-over-year.
• Gross Margin: 71.4% in Q4 2024, 71.2% for the full year.
• Operating Expenses: $8.9 million in Q4 2024, $29.4 million for the full year, expected to exceed $40 million in 2025.
• Free Cash Flow: Positive $2.4 million in Q4 2024.
• Cash and Investments: $24.9 million at the end of Q4 2024.
• Customer Acquisition Cost: $1,200 per pipeline add in Q4 2024, expected to remain flat at $1,400 to $1,500 in 2025.
• Potential Tariff Impact: Less than 100 basis points on gross margin in 2025.

Operational Updates

• CMS Reimbursement: Expanded access to Medicare-aged population, starting in April of the previous year.
• Patient Pipeline: 1,389 patients at December end, with a record 657 new additions in Q4.
• Backlog and Orders: 272 patients in backlog, with 233 orders in Q4.
• O&P Channel: Over 60 certified orthotists/prosthetists trained for growth in 2025.
• International Expansion: Germany expected to contribute $4.5 million in 2025; a joint venture in China could yield $10.75 million over ten years.

Future Outlook

• Revenue Growth: Anticipated 54% to 63% growth in 2025.
• O&P Channel Expansion: Significant growth expected in the second half of 2025 with minimal incremental costs.
• R&D Investment: Planned doubling of R&D spending to speed up new product development.
• Medicare Advantage Penetration: Targeting increased reimbursement, with current market share at 40%.
• China Joint Venture: Potential monetization and spin-off opportunities for shareholders.
• Tariff Mitigation: Strategies under evaluation to minimize the impact of retaliatory tariffs.

Q&A Highlights

• Medicare Coverage: Includes disabled individuals under 65 with specific conditions.
• Revenue Recognition: Medicare revenue is booked at delivery, with over 90% recorded at delivery in Q4.
• Gross Margin Expectations: A blended ASP drop is anticipated as the O&P channel expands.

For a detailed understanding, readers are encouraged to refer to the full transcript below.

Full transcript - 24th Annual Needham Virtual Healthcare Conference:

Mike Matson, Equity Research Team Lead, Needham: Good afternoon. Thanks for joining us again at the twenty fourth Annual Needham Healthcare Conference. I'm Mike Matson. I lead the med tech and diagnostics equity research team here. I'm pleased to introduce Myomo.

Presenting from Myomo, have Paul Gagona, c chairman, president, and CEO, and David Henry, CFO. They're gonna give a presentation on Myomo, and then we'll open it for questions at the end. You can submit questions through the Needham conference website, or you can email them to me at mbatson@neomco.com. So with that, I'll turn it over to Paul. Thanks.

Paul Gagona, Chairman, President, and CEO, Myomo: Well, thank you, Mike. It's a pleasure to introduce Myomo to you. You know, our mission is to conquer upper limb paralysis. As you'll see, we've got the only technology that is enabling paralyzed individuals to use their paralyzed arms and hands once again. So let's, go through our safe harbor statement.

And, as you'll see, thanks to reimbursement by Medicare now, it's a new world for people suffering from upper extremity impairment because now we've expanded access to our devices. From an investor's perspective, here are the key takeaways. CMS reimbursement, which started last April just a year ago, has opened access to a large Medicare age population. By the way, two thirds of strokes happen to people aged 65 and older, so now they have access to our device. As you'll see, there's a large prevalence population of, over three million individuals just in The United States.

And we believe that, based on our experience, you know, up to six hundred thousand of these patient candidates could be, have access to a MyoPro. We have the first mover advantage. We have a strong patent position. We're the only one in the market here in The United States, also a couple of international markets. We are the technology leader.

This came out of MIT and Harvard Medical School. We've got an exciting product development road map that we're investing in. We are both a device manufacturer, but also a direct provider ourselves where we do direct billing, to the insurance companies with our own clinical staff. And now we have the opportunity to not only expand that channel, but also develop the new orthotics and prosthetics channel for our devices. And as Dave, our CFO, will explain, there's attractive margins to this business.

And, as we expand, there's opportunities for up scale leverage due to scale here. So now what causes arm and hand hand paralysis? Well, the major diagnoses or indications, stroke, which happens eight hundred thousand times a year just in The United States, Fifteen Million Times worldwide every year. Also, traumatic brain injuries, spinal cord injuries, brachial plexus, which is the nerve that connects the spinal cord into the shoulder. And some of the other, indications, CP, MS, ALS, spinal muscular atrophy, acute flaccid myelitis, some of those afflict more pediatric patients.

So what happens after someone has a stroke? What typically happens is due to the blood clot or hemorrhage in one side of the brain, you get damage to the motor cortex because you lose 2,000,000 neurons every minute after a stroke occurs. So it's very important to get to treatment right away. Usually, you'll get stabilized in an acute care facility like Mass General Hospital, and then you'll go to some place for, like, a Spaulding rehab for rehabilitation. Because the science behind the physical therapy is that if you exercise a limb over and over again, you can recreate the neural pathways that power that particular limb.

And so occupational therapists will work with the patient, as shown here, to try to get you to move that arm, try to open and close your hand and fingers. They may try a static bracing. SABL, which is the spring operating device to open a spastic hand. There's electrical stimulation. Some of these clinics have bought these large stationary robotic systems.

Whole idea is to try to get you rehabilitated. And if you have high spasticity where your arm and hand are tightly clenched, you might take Botox or Baclofen. These don't restore function. They may relieve the pain for a while, but, it comes back, you need another dose of these medications. And what the the the occupational therapy works for about half of the patients, but the other half are typically told after six to twelve months, you've plateaued.

There's nothing more we can do for you. Insurance won't pay for any more therapy sessions because you're not getting any better, and you're left with this paralyzed arm. Basically told, get used to it. You'll never use that arm and hand again for the rest of your life. And what we're showing is that that conventional wisdom doesn't apply anymore because what's needed for this medical unmet need is a lightweight device that's portable.

You can use it at home, work, school, and in the community. And here's a short video about what happens to an individual after they've had a stroke.

Unidentified speaker: Jessica Peters of Salem had a major stroke when she was just 26 years old. So after the stroke,

Unidentified speaker: you really had no use to

Unidentified speaker: this arm then? Nothing. Really.

Unidentified speaker: Despite years of therapy, her speech and right arm never fully recovered.

Unidentified speaker: I I used to dead arm.

Unidentified speaker: Until she met the team at Myomo.

Paul Gagona, Chairman, President, and CEO, Myomo: Just a dead arm. Think about how frustrating it would be if you woke up tomorrow morning and you were hemipuretic, where half of your body was paralyzed and you can't use that arm for activities of daily living. So this is a substantial market opportunity. Starting on the left hand side, if you look at just stroke in just The United States, about eight hundred thousand strokes every year. For every forty seconds, there's a stroke.

And about twenty to thirty percent of the individuals die as a result of the stroke or complications like Luke Perry, the actor died at age 52. David Stern, former NBA commissioner, died from his stroke. And then for those that survive in five hundred thousand or more, they will go through this type of occupational therapy, physical therapy for the legs, and so on. And the good news for them is that half of them will recover enough function to restore their normal, activities, but the other half, about a quarter million, a year are basically left with this chronic arm paralysis. And then at the top of that pyramid, you know, we narrow down the inclusion criteria to, up to about twenty percent of these, individuals.

So that's another fifty thousand every year that join this prevalence population in the right hand pyramid here. So if I start at the base, there's, three million plus individuals, that have suffered a stroke with this chronic arm paralysis. But we narrow the inclusion criteria. You've gotta be living at home because if you're an assisted living, nursing home, insurance won't pay for this. You've got other care for you.

This is for people who wanna stay out of these facilities, stay at home, be functional and independent. And then we look at your your medical condition. So we screen these patients, per these criteria that we agreed to with the medical directors at CMS, at Medicare. And some people, they get excluded there because you have to have enough, as you'll see, EMG signal to power the device. You have to be cognitively intact.

You have to be, you know, well enough to be able to, use this device, and not just be some people are so injured, they're just lying in bed, not gonna get up again, unfortunately. So you want people that would benefit from this device. Then we look at what their insurance is, and the good news is as of last year, basically doubled the number of seniors that have access to this because about half the seniors are covered with Medicare Advantage plans, the others with standard fee for service Medicare Part b. As of last year, we can now serve those individuals instead of having to turn them away. So that gets us to up to 600,000 potential candidates for MyoPro.

We've delivered over 3,000 devices to patients during our history. That's an accelerating number as you'll see, in our revenue growth. Well, the big news is about clarity on reimbursement. We were awarded HCPCS codes as, you know, the medical device billing codes by Medicare back in 2019. However, they put us in the wrong category at that time.

They consider this a short term rental, like durable medical equipment, like an oxygen tank or a hospital bed as a standard off the shelf item used for a short period of time in the home, brought back, sanitized, and dispensed to the next patient. Well, we made the case that, you know, this is like a custom prosthetic device for amputees that a patient's gonna wear for a long time. These are individually fabricated for each patient. It's not a short term off the shelf rental. COVID delayed our appeal back to CMS, but then eventually, they opened up the public hearing.

We presented our data. And as of last year, they started covering this device. And then effective January first of this year, we got a 2.4% increase. So the fees are $834,000 for the Motion W, which is an elbow wrist unit, and $67,000 for our main product line, which is Motion G, which is the elbow, the wrist, and the hand, over 90% of our unit volume are for the Motion g. As a result of Medicare coverage, and we've had history with Medicare Advantage plans, they are supposed to cover what is medically necessary and what Medicare covers.

So we are getting paid by Medicare Advantage plans in some cases, whether it's UnitedHealthcare, some of the Blue Cross plans, Cigna, and so on. And we're working with them to obtain payer contracts. And the VA has been covering this for ten years for patients in their care. Over a 30 medical centers have already ordered MyoPros for their veterans. Internationally, our biggest market is Germany.

Good sized market, over 80,000,000 population. Good economy. They like high-tech medical products, and we're getting the statutory health insurers to pay for the device firms like TKK and and so on. We do a little bit other business, Australia and a few other markets. The key thing for at Medicare here in The United States was research.

You know, we have studies going back ten years of our U of patient outcomes as a result of using the MyoPro. When we interviewed medical directors, they advised us. They said, well, if you'd like us to cover this, show us longer term use in situ in the home. So we created our own patient registry for real world evidence. We followed patients for three months up to seventeen months.

These are people in that, target demographic, 65 and older. They showed significant, positive outcomes as a result of using their custom MyoPro. We presented that to the CMS medical directors. And as we saw, we got coverage as of April. Here's a couple examples of what patients can do with their paralyzed arms and a MyoPro.

Unidentified speaker: I'm very satisfied. It changed my life. I'm doing things now that I could never do.

Paul Gagona, Chairman, President, and CEO, Myomo: You see how she can use both of her arms for cooking, other household tasks. Think of how difficult would it be to be to do this with only one arm. And then when this came in from our German team, if you're German, one of your activities of daily living may be opening your beer and try doing this with one arm. And whether it's a pill bottle, a water bottle, brushing your teeth, getting dressed, doing laundry, these are the types of activities that we enable with our device. Now let's talk about the science behind how it works.

This came out of MIT and Harvard Medical School. When you're trying to pick up, for example, this cup, I'm sending a signal, in this case, from my left motor cortex through the central nervous system, spinal cord, into the peripheral nerve, and that goes into the muscle. And if you're a healthy individual, the muscle responds. You can pick up a cup. You can feed yourself, do these other activities.

And your muscles emit a trace microvoltage on the surface of the skin called the electromyogram or EMG signal, myo being the Greek word for muscle. Just like you might be familiar with a band that might pick up an EEG signal or EKG for cardio, your muscles emit this, trace microvoltage. Now for these individuals who've had a stroke, for example, they've had motor nor neuron damage in the motor cortex, and they have an attenuated signal, which is why they struggle. They're sending not enough signal into the arm, and so they can't move it. They can't open the hand.

However, just thinking about doing it creates enough muscular activity that it generates this trace EMG signal on the surface of the skin. So we have a proprietary brain computer interface. These are noninvasive sensors. No craniotomy required. They're they're inside the brace.

You just put on the brace. The sensors touch your skin by the bicep, the tricep, in the wrist, for the hand part of the device. You think about moving your arm, and it amplifies what you're trying to do. Our sensors have gotten so good with the software. We can take those those faintest signal and amplify that by a hundred thousand x.

So it's a lightweight device. It's some small motors. The microprocessor onboard converts your signals into motion. Hence is why Maggie, a stroke survivor, said, gee. This is like my own motion.

We've got a strong IP portfolio, 35 patents in The US, selected international markets to go out to the year 02/1942. We've got others pending as well. So I'm going spend a little time now on how do we go to market? Because, again, there's three million plus patients here just in The US. However, they're not at the rehab hospital.

They're not at the neurologist's office because these clinicians have said, you're done. We can't do anything for you. Well, but they're at home. They're on social media. So we advertise on television, on Facebook, on our website, and so on to basically generate leads.

We get a significant number of leads every month. We have a call center in Fort Worth, Texas now up to 18 people staffing it. Take these leads. We talk to the patients. We ask them about their insurance, their medical condition.

And then, if they were qualified, we will do a free telehealth screening just like this, a Zoom call, where one of our clinical staff will assess whether or not, they would be a good candidate for the MyoProbe. If we give them the go ahead, they become part of our patient pipeline. And we added over 600 patients to the pipeline just last quarter. And then we have to go through the reimbursement process. Because like a hip or knee replacement, you just don't walk in a hospital to get a device like this.

You need a preauthorization from your insurance company if you've got commercial plans. So we have a chief medical officer and his team with patient navigators, act as case managers where you make sure you go to your physician for a face to face visit. We get a prescription for the device. We collect your medical documents that says you've had a stroke x years ago. You've tried other alternatives.

This is the least costly, most functional option for you at this point. And then we'll submit it to your commercial plan for a a preauthorization request. If it's Medicare Part B, because we've agreed on the medical criteria, if you meet those criteria, we can proceed to fit you with a device. That's actually accelerate the revenue cycle or what we call these Medicare Part b patients. So then we have to custom fabricate the device for you.

We start out by measuring your arm. We can do it in person. Although during COVID, we invented a remote measurement kit. We send a briefcase to your home. You pop it open.

One of our clinical staff gets on a Zoom call with you. We measure your arm. We take a scan of your hand, and then we three d print the shells that go above on the the bicep cuff as well as on the forearm. Then we assemble those here in our production facility in Burlington, Massachusetts. And when the MyoPro two plus is assembled and tested, we ship it out to either one of our clinicians or an orthotics and prosthetics practice who are these licensed professionals that fit it.

There's software we provide on a laptop to adjust the settings for you to amplify your own signals. And then we send you to, outpatient therapy at a convenient rehab hospital next June. We've got a team of trainers that train those, rehab, OTs and tell you how to use that device. You need to usually go one or two sessions for up to twelve weeks to relearn how to use an arm sometimes twenty five years after your stroke. And we have a team of MyoKare coaches that follow-up with you over the first year to make sure, that the device is working well for you and you're accomplishing those goals.

And here's one of our TV ads because we realized that this demographic, often retired, is at home. They're watching TV. And so we found that this is a great way to demonstrate, what the device can do for you. And you'll see we now can say that, this is covered by Medicare.

Unidentified speaker: Have you or a loved one lost the mobility of an arm or hand that's been weakened due to stroke, other neuromuscular diseases, or injuries? What if there's a way to regain the use of that hand or arm again? How would your life change? The MyoPro orthotic device, a breakthrough in modern medical robotics, might be the answer to giving you the freedom to do even the simplest tasks to do. MyoPro is a powered arm and hand organosis designed to help restore function to the wearer's paralyzed or weakened upper extremities.

Unidentified speaker: The MyoPro is the only device that sensing an individual's EMG signals, which is the electrical activity delivered to the bustle, can help the patient improve their ability to use their arms and hands so they can participate in the activities of daily living. In one word, it's empowerment.

Unidentified speaker: Once I found out about the device and actually got one on, it really helped you mentally because I can learn how to do this again. You know? These tools hadn't been used in, seven years. So if anybody tells you you can't get something back that you lost a few years ago, that's not true statement.

Unidentified speaker: The MyoPro is a unique and cutting edge technology that expands the benefits of traditional clinic based therapy to the home and daily life of the user. The goal is to provide them with a tool that can be worn on a daily basis to improve upper extremity movement, independence, and quality of life.

Unidentified speaker: Here's your opportunity to regain your life back and enjoy doing the things you did before.

Unidentified speaker: Now accepting Medicare.

Paul Gagona, Chairman, President, and CEO, Myomo: Alright. Dave, why don't you talk about then our our financials here, our channel strategy?

David Henry, CFO, Myomo: Yeah. So Paul just talked to you about earlier, showing you that go to market strategy that represents our direct billing channel, what we call direct billing, where we are the direct provider of the device to the patient in addition to the being the manufacturer. That represented 82% of revenue in the fourth quarter. Other channels include the o and p channels, both internationally and and in The United States. Germany was 12% of revenue.

That was most of where our international revenue came from in the fourth quarter with 1% from the VA and then 5% from the US OMP channel. Now that US OMP channel is a is something that we're look we're looking at to grow in 2025 and beyond because now that we have, you know, the clarity of reimbursement, now that Medicare is covering from the covering the device, the OMP channel is now much more interested in doing business with us because prior, there was no certainty of reimbursement, and they didn't wanna make the investment to purchase a purchase a device, or they didn't feel that there was a good chance of reimbursement. And so when you think of the OMP channel, they are primarily engaging patients that are in that incidence population that Paul showed you earlier. However, our advertising and such, our business activities are directed toward that prevalence population. So we think that one plus one could equal fairly close to two as the OMP channel begins to ramp up here later in twenty twenty twenty five without significantly impacting our direct billing business.

So, you know, we are in the process of training a number of OMP clinics around the country. More than a 60 certified prosthesis orthotists have been trained so far through the end of the fourth quarter. We're obviously focusing on hangar clinics. They are the largest OMP provider in the in the country with more than 900 clinics around The United States, and there's others that you see there. And of the 60 that we've trained, about a hundred of them are hangar.

So we're really focusing on them. You know, we see the OMP channel as a big opportunity in 2025 because we don't need to spend the incremental dollars below the line, you know, in terms of reimbursement personnel, advertising, clinical personnel to support the OMP channel. We only need a few business development people and a few clinical trainers. So not a lot of incremental operating expenses to support that channel. Now the economics of that channel are that if we once we start to sell into it in volume, you know, the the price will be about half of what we might get from the direct billing channel, but most of that's going to fall through as compared on the direct billing side where we have all the incremental operating expenses that we have to incur as well.

So we think that despite a lower ASP and lower gross margin from the from the O and P side of the business, we think the incremental operating margins, which should be at or better than what we would see on the direct billing side. Internationally, I mentioned they were 12% of revenue. We have CE Mark in Europe or FDA class two five ten k exempt in The United States. We have a joint venture company in China, We have a 19.9% equity interest there. We don't you do not have to put any cash into the joint venture.

We're just contributing know how and technology. It becomes a call option for the for Myomo shareholders all down the road should that business take off and maybe they spin it out someday and, you know, as a way for Myomo shareholders to be monetized for that investment. Back to the direct billing channel in terms of the leading indicators that we look at pipeline and backlog. Pipeline are those patients that have completed a successful telehealth op but we don't have insurance authorization yet. Or in the case of a Medicare patient, we haven't collected the sufficient medical documentation nor has the patient seen their physician yet.

Those are criteria that are required in order to exit the pipeline. That pipeline at the December was one thousand three hundred and eighty nine patients. That was up compared to one thousand forty two patients at the end of twenty twenty three. We had a record 657 adds to the pipeline in the fourth quarter, and about 18% of that pipeline represents Medicare Part b patients. Once a patient exits the pipeline through either an insurance authorization or having sufficient medical documents, if they're a Medicare patient, they enter the backlog.

That's those patients where we have, that authorization to proceed, but we don't have revenue yet. That stood at 272 patients at the end of the fourth quarter. That was built on 233 authorizations and orders, which was a record in the fourth quarter, and 220 revenue units in the fourth quarter, which was also a record. So the backlog declined a bit because the growth in the revenue units exceeded the growth in the authorizations and orders, but still a very healthy backlog. When you look at our revenue trends on a quarterly basis, you can see that fourth quarter was $12,000,000, which was a record amount of revenue for the company.

Our first quarter guidance is between 9 and 9 and a half million, which is gonna be more than double year over year what our revenue was in first quarter of twenty twenty four. There is a seasonality to the business because we slowed down on advertising spending in the fourth quarter just because of the the less efficiency due to holiday advertising, Medicare advantage advertising. And in the case of 2024 election advertising, there's just more competition out there. So, as a result, the, you know, the lead generation and the, the the pipeline additions slowed down. And as a result, generally, revenues in the first half of the year are lower than in the second half of the year, and you and you can see that trend has played out fairly consistently, over the last several years.

Looking at the p and l in greater detail, as I mentioned, revenue was $12,100,000. Gross margin was 71.4%. For the full year, revenue was 32,600,000.0 on gross margin of 71.2%. Operating expenses were $8,900,000 in the fourth quarter. They were higher because we're increasing our r and d spend.

We also increased our our spending throughout the, what I'll call the capacity chain to support the direct billing channel. So additional clinical personnel, marketing personnel, reimbursement personnel that are down in g and a, and then, you know, other people like human resources folks to support all of that growth. So 8,900,000.0 of operating expenses in the fourth quarter and then $29,400,000 for the year. I would expect that op that operating expenses will continue to grow in 2025. R and D expenses should roughly double because we are trying to take advantage of the first mover advantage that we have, spend more on r and d to to bring newer products to market faster.

And then, with the growth in the, expected in 2025 from our revenues, we expect to support that with additional operating expense growth. And so I would expect operating expenses will be more than $40,000,000 in 2025. Over to the balance sheet, we had 24,900,000.0 in cash and investments exiting the fourth quarter. For the first time in the fourth quarter, we generated positive free cash flow of $2,400,000. We did an offering in December of twenty twenty four that generated 15,800,000.0 of net proceeds, and that free cash flow is is obviously excluding, those proceeds.

Looking at the cap table, we have 41,400,000.0 shares outstanding. That includes about 7,000,000 prefunded warrants that have a strike price of par value of point zero zero zero one. So they're basically common stock equivalents. We include them in our weighted average shares outstanding on the income statement, but they are not voting shares at this time. And then those 668,000 warrants that were outstanding at the end of the fourth quarter, those have, expired now, though they expired in February 2025.

Our full year revenue guidance is for 50 to $53,000,000. You can see a consistent growth trend, over the over the last decade. That, you know, that growth rate of 54 to 63% is driven by the the additional investment we plan to make, as I mentioned earlier, in the direct billing channel and also expected growth in the o and p channel as we get towards the second half of the year. Now what we've been you know, what's been driving the market recently has been the impact or the or the presumed impact on tariffs. So we've done some analysis ourselves.

I just wanted to give an update of where we stand on that. Much of the materials that are used in the MyoPro, they're purchased from US suppliers. You know, we're assembled in The US in Burlington, Massachusetts. Now the there are materials, though, that are imported. That includes elbow and wrist motors, batteries, battery chargers, laptop, computers, and the countries of origin include China, Vietnam, and Switzerland, and some of those countries are subject to the the higher tariffs.

Now the current estimate is is that the tariffs as they currently stand, I realize that they were suspended yesterday. But if they are fully implemented, at the rates that they stand now, that's expected to have a less than 100 basis points gross margin impact on the cost of Amaya Pro in 2025. So now we're looking to China specifically because those tariffs continue to be ratcheted up. We expect that impact at these higher rates to be less than $100,000 in 2025. So not much impact from the from these tariffs on our gross margins for the full year.

And certainly looking at China, not much impact China specifically. Now also Germany, we import the MyoPro or export the MyoPro to Germany from The United States. Right now, there's been no announcement of any retaliatory tariffs that could add cost to the MyoPro there. There is local competition from companies like Vincent Systems. So passing along any potential additional tariffs, we would need to review that.

But right now, international was 12% of revenue. We're not seeing any retaliatory tariffs at this time, but that could change, down the road. Now looking to our growth trajectory, there are a number of paths to increase revenues, and we're we expect to take advantage of a number of those When we speak of increased penetration of The US market, we're talking about Medicare Advantage plans that are now required to cover for the MyoPro now that full Medicare is covering from the device. And only about 40% of Medicare Advantage plans by volume have have reimbursed for the for the MyoPro in the past.

When I say volume, I mean market share. So there's a lot of opportunity there with Medicare Advantage. In Germany. We're also, you know, looking to expand their revenues. We're four about 4 and a half million dollars in 2025.

You know, back to The US market just a second. I forgot to mention that, you know, there's continued work towards increasing the number of payers that are under contract. And so far, we have about, about half a dozen or so payers under contract, mostly Blue Cross Blue Shield plans. And those, those plans represent about 18,000,000 18,600,000 covered lives. There's also the the joint venture in China.

If that should, get up off the ground, we're entitled to about 10,750,000.00 of incremental license fees over the next ten years. Obviously, the continued penetration of Medicare Part b and then the o and p channel, which I mentioned. So with the, with the publishing of fees by Medicare, CMS has created a multibillion dollar market where we have first mover advantage, and we're the only company in The US that can be provide the product, that can bill under those two codes, l eighty seven zero one and 8702. I'll turn it to Paul to talk about the board and the officers.

Paul Gagona, Chairman, President, and CEO, Myomo: Thank you. Well, we've got a very experienced team. People have, been in medical technologies. Michael Mitchell used to work at Invacare, had been in the DME business, growing our commercial operations. Doctor.

Coleman, twenty five years, as a chief medical officer in related technologies. Malcolm Bach, very experienced head of engineering product strategy. John Freuders, an out of back and re walk veteran running our international business. Our board, I serve as chairman. We have six outside board members who bring skills such as Tom Kirk used to run Hanger Clinics, built that to a billion dollar company plus experts in reimbursements, in medical device product development.

It's like Jacobovitz, from AIGH representing investors, and Heather Goetz joined us this year, this past year as a as a very experienced CFO and COO. So this team has worked well together for a number of years. That's why we are scaling the business so successfully. And with that, I think we'll turn it over back to you, Mike, for any q and a.

Mike Matson, Equity Research Team Lead, Needham: Yeah. Thanks. So I have a few questions. I guess, first, so with the Medicare coverage, you know, I'm wondering how much of that is the elderly population is because I I thought medic does Medicare cover some disabled people? Would there be people that are disabled because of their stroke that would be getting Medicare at a younger age, or is it really just limited to the 65 population?

Paul Gagona, Chairman, President, and CEO, Myomo: No. Mike, you're correct. While Medicare is, designed for people 65 and older, if you've been disabled for a few years, you can get Medicare coverage. For example, Arise, prosthetics and orthotics in Arizona, recently fit, a 50 year eight year old individual who'd had a stroke twelve years earlier. He's on Medicare, and he got his device as a result of that.

Mike Matson, Equity Research Team Lead, Needham: Okay. Alright. And then just have you you know, given the OpEx increasing and what you're planning this year, I'm assuming this is the case, but have you how much have you ramped up your kinda ad spending and whatnot since you got the Medicare coverage? And and, you know, how much how has that really helped your kinda yield in terms of, like, you know, every dollar you're spending, like, how many you know, maybe customer acquisition cost is a better way to

Unidentified speaker: put it. Like, I don't I don't know if

Mike Matson, Equity Research Team Lead, Needham: you're gonna quantify that, but, like, has that gone down now that there's a bigger pool of people out there that are covered?

David Henry, CFO, Myomo: We had a our our customer our our cost per pipeline ad was about $1,200 in the fourth quarter. We mentioned that in the first quarter, we you know, Meta made some changes on their algorithm, which related to, you know, compliance and legal issues around HIPAA and around what information that that that could be used to target potential patients that could be used by advertisers. So we had a a a small period of time, you know, four or six week period here in the first quarter where we had lower leads. So I do expect that the cost per pipeline ad will increase in the first quarter, but our operating assumption aside from that transient event is that as we increase the ad spending to around $6,000,000 or more in 2025, that we should see the a commensurate number of pipeline adds so that the cost per pipeline ad should stay relatively flat compared with 2024. Full year 2024 was around $141,500 dollars.

Mike Matson, Equity Research Team Lead, Needham: Okay. Got it. I think we're almost out of time, but I just wanted to ask one and apologize if you've mentioned this and I missed it. But just from a revenue recognition point, you know, at least with Medicare,

David Henry, CFO, Myomo: are you at a point

Mike Matson, Equity Research Team Lead, Needham: where you can book the the revenue on the shipment, or do you have to wait till you actually collect payment?

David Henry, CFO, Myomo: We are now booking Medicare revenue at delivery. And if they if they have the right supplemental insurance, we'll book it for the full allowable. And in the in the fourth quarter, more than 90% of our revenues were recorded at delivery.

Mike Matson, Equity Research Team Lead, Needham: All right. And then one more, I guess, just on gross margin. So is there room to I imagine your volumes are growing pretty fast on the one hand. But on the other hand, I mean, is sort of a semi customized product. So are there efficiencies as, you know, volumes go up?

Like, should you get should your gross margins go up as, you know, volumes grow here, or is it just that you're not gonna necessarily benefit from that scale because of the customization?

David Henry, CFO, Myomo: I think it'll depend on the OMP channel and how quickly it ramps because as I mentioned, we'll you know, the the blended ASP will drop as the OMP channel wraps ramps up. So I think, you know, if that were to be the case, you know, gross margins would come down. But I I still think, you know, for this year, I I still think, you know, a gross margin in the 70% range is is is certainly realistic.

Mike Matson, Equity Research Team Lead, Needham: Okay. Alright. I think we're out of time, so we have to wrap up there. But thanks, guys.

Paul Gagona, Chairman, President, and CEO, Myomo: Alright. Thank you.

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