MYOMO, INC. Q3 FY2025 earnings call

Key Initiatives

• Improving Patient Identification: Shifted advertising spend from social media to TV, resulting in higher quality pipeline adds and sequential increase in candidates. Hired a new head of marketing with healthcare advertising experience to optimize media use.
• Expanding MyoConnect and O&P Channel: MyoConnect clinical referral program generating high-quality referrals; O&P channel revenue more than doubled year over year, with strong growth in Germany and meetings with large O&P clinical groups.
• Expanding Insurance Coverage: Chief Medical Officer and reimbursement team working to get more MyoPro authorizations, signed additional contract with a payer for 35 million covered lives, and other contracts pending.
• Reducing Operating Costs: Implemented manufacturing changes to improve gross margin and managed headcount and other cost reductions.

Revenue for the third quarter was $10.1 million. International revenue was a record $1.8 million, accounting for 18% of total revenue. O&P channel revenue was $900,000, up 154% year over year and representing 9% of total revenue. Medicare Part B patients made up 54% of revenue, while Medicare Advantage revenue was 18% of third quarter revenue but down 18% compared to the prior year. The direct billing channel accounted for 73% of revenue in the third quarter.

Forward-Looking Statements

• Full-year 2025 revenue is expected to be in the range of $40 million to $42 million, representing an increase of over 23% from the prior year.
• Focus on diversifying revenue streams in 2026, relying less on advertising-driven revenues and growing through MyoConnect platform and O&P channel in international markets.
• Aim to improve operating leverage and lower cash burn in 2026.

Risks Discussed

• Insurance pre-authorization denials for Medicare Advantage patients, leading to appeals process with varying success rates.
• Changes in Medicare Advantage coverage by insurance companies, which could impact patient access to MyoPro.
• Material cost increases and unfavorable changes in overhead absorbed in inventory affecting gross margin.
• Dependence on successful execution of MyoConnect program and O&P channel expansion for future growth.

Q: Could you quantify the scale of the U.S. O&P business in the third quarter?

A: O&P channel revenue was about $900,000, roughly 30 units.

Q: What levers were identified to reduce customer acquisition costs?

A: Reviewing effectiveness of various media (social media, TV, etc.) to generate more leads at lower cost per lead for qualified patients.

Q: What's the driver of backlog drops?

A: About 40% of backlog drops related to cleanup in Germany, with rest from normal activity.

Q: What's the quarterly revenue run rate needed to breakeven?

A: Around $16 million to $17 million after headcount reduction.

Q: What's behind the increase in international Germany business?

A: Network of 100 O&P channel partners and favorable reimbursement with statutory health insurers in Germany.

Q: How is the rest of international business?

A: Other international markets not spending much on reimbursement; China JV still conducting clinical trial for NMPA approval.