Myomo Announces Second Quarter 2018 Financial Results
Achieved Revenue Growth of 106%
Recent Highlights and Accomplishments:
- Achieved total revenue in the second quarter 2018 of $632,000, an increase of 106%, versus the comparable period of 2017.
- Announced agreements with leading orthotics and prosthetics (O&P) practices to bring MyoPro® availability to 16 new U.S. locations. Myomo currently has 80 U.S. locations offering the MyoPro line of powered orthosis.
- Announced the introduction of MyoPro myoelectric arm orthosis (powered brace) for adolescent patients with paralyzed or weakened arms.
- Received a favorable preliminary decision from the Centers for Medicare & Medicaid Services (“CMS”) regarding the Company’s application for Healthcare Common Procedure Coding System (HCPCS) “L”.
- Appointed Micah Mitchell as Chief Commercial Officer.
Paul R. Gudonis, Chairman & CEO of Myomo, stated: “We are pleased to report quarterly revenues growth of 106% year over year. We have opened new sales regions, added new O&P locations, and launched digital marketing campaigns to reach the many individuals in the US with upper limb paralysis. With growing interest from patients and O&P providers, we continue to expect increased revenue for the year.”
|Three months ended||Period-to-period||Six months ended||Period-to-period|
|June 30,||change||June 30,||change|
|Cost of revenue||200,446||98,641||101,805||103||%||308,526||177,210||131,316||74||%|
Total revenue in the second quarter 2018 was $632,000, an increase of 106%, versus the comparable period of 2017. Total revenue for the six months ended June 30, 2018 was $946,000, an increase of 81%, versus the comparable period of 2017. Our results for the three and six months ended June 30, 2018, included increases in units, as well as a higher average selling price primarily due direct sales.
Gross margin was 68% for the quarter ended June 30, 2018 and 2017. Gross margin was 67% and 66% for the six months ended June 30, 2018 and 2017, respectively.
Operating expenses were $3,114,000, an increase of $973,000, or 45%, during the three months ended June 30, 2018, versus the comparable period of 2017. Operating expenses were $5,722,000, an increase of $2,079,000, or 57%, during the six months ended June 30, 2018, as compared to the six months ended June 30, 2017. The increases in our operating expenses primarily reflect higher compensation costs associated with the addition of personnel, the expansion of our sales, marketing and product development efforts, and increased spending to secure reimbursement, as well as increased administrative costs to support our growing business and public company compliance requirements.
During the three months ended June 30, 2018 the company generated interest income of $50,000, as compared to incurring interest expense of $146,250 in the same period of 2017. We did not incur interest expense during the three months ended June 30, 2018 due to the payoff of our outstanding debt and our convertible promissory notes being converted into common stock upon the closing of our IPO on June 9, 2017.
The Company’s net loss for the quarter ended June 30, 2018 amounted to $2,630,000, compared with a net loss of $7,382,000 for the corresponding period of 2017. Net loss for the quarter ended June 30, 2017 includes a $5,172,000 charge for debt discount on convertible notes. Net loss available to common stockholders for the quarter ended June 30, 2018 was $2,630,000 or ($0.21) per share, compared with a net loss available to common stockholders of $7,755,000, or ($3.35) per share, for the corresponding year ago period.
Adjusted EBITDA1 for the quarter ended June 30, 2018 was a loss of $2,512,000, compared with a loss of $1,656,000 for the corresponding 2017 period. Adjusted EBITDA for the six months ended June 30, 2018 was a loss of $4,564,000, compared with a loss of $2,997,000 for the corresponding 2017 period. A reconciliation of GAAP net loss to this non-GAAP financial measure has been provided in the financial statement tables included in this press release. An explanation of this measure is also included below under the heading “Non-GAAP Financial Measures.”
Cash on hand at June 30, 2018 was $11,684,000, compared to $12,959,000 at December 31, 2017.
Conference Call and Webcast Information
Myomo will hold a conference call today, August 7, 2018 at 4:30 p.m. EDT. To access the conference call, please dial 1-877-270-2148 from the U.S. or 1-412-902-6510 internationally. Please instruct the operator to join you into Myomo’s earnings conference call. A webcast and accompanying slides can also be accessed through Myomo’s Investor Relations page. Please allow extra time prior to the call to visit the site and download any necessary software to listen to the live broadcast.
A replay of the conference call will be available approximately one hour after completion of the live conference call at the Investor Relations page. A dial-in replay of the call will be available until August 21, 2018; please dial 1-877-344-7529 from the U.S. or 1-412-317-0088 internationally and provide the passcode of 10122822.
Myomo, Inc. is a wearable medical robotics company that offers expanded mobility for those suffering from neurological disorders and upper limb paralysis. Myomo develops and markets the MyoPro product line. MyoPro is a powered upper limb orthosis designed to support the arm and restore function to the weakened or paralyzed arms of patients suffering from CVA stroke, brachial plexus injury, traumatic brain or spinal cord injury, ALS or other neuromuscular disease or injury. It is currently the only marketed device that, sensing a patient’s own EMG signals through non-invasive sensors on the arm, can restore an individual’s ability to perform activities of daily living, including feeding themselves, carrying objects and doing household tasks. Many are able to return to work, live independently and reduce their cost of care. Myomo is headquartered in Cambridge, Massachusetts, with sales and clinical professionals across the U.S. For more information, please visit www.myomo.com.
1 Adjusted EBITDA is earnings before interest, taxes, depreciation and amortization adjusted for the impact of the write-off of unamortized debt discount associated with conversion of convertible notes into common stock and warrants, stock based-compensation, the impact of the fair value revaluation of our derivative liabilities and the loss on early extinguishment of debt.
Forward Looking Statements
This press release contains forward-looking statements regarding the Company's future business expectations, including the scale-up and expansion of commercial operations, projected users of MyoPro, our expectations for revenues and our results of operations, and the potential benefits to users of our products, which are subject to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are only predictions and may differ materially from actual results due to a variety of factors.
These factors include, among other things:
- our sales and commercialization efforts;
- our ability to achieve reimbursement from third-party payers for our products;
- our dependence upon external sources for the financing of our operations;
- our ability to effectively execute our business plan; and
- our expectations as to our clinical research program and clinical results.
More information about these and other factors that potentially could affect our financial results is included in Myomo's filings with the Securities and Exchange Commission, including those contained in the risk factors section of the Company’s annual report on Form 10-K, subsequent quarterly reports on Form 10-Q and other filings with the Commission. The Company cautions readers not to place undue reliance on any such forward-looking statements, which speak only as of the date made. Although the forward-looking statements in this release of financial information are based on our beliefs, assumptions and expectations, taking into account all information currently available to us, we cannot guarantee future transactions, results, performance, achievements or outcomes. No assurance can be made to any investor by anyone that the expectations reflected in our forward-looking statements will be attained, or that deviations from them will not be material and adverse. The Company disclaims any obligation subsequently to revise any forward-looking statements to reflect events or circumstances after the date of such statements or to reflect the occurrence of anticipated or unanticipated events.
Non-GAAP Financial Measures
Myomo has provided in this release of financial information that has not been prepared in accordance with generally accepted accounting principles in the United States, or GAAP. This information includes Adjusted EBITDA. This non-GAAP financial measure is not in accordance with, or an alternative for, GAAP and may be different from similar non-GAAP financial measures used by other companies. Myomo believes that the use of this non-GAAP financial measures provides supplementary information for investors to use in evaluating operating performance and in comparing its financial measures with other companies in Myomo’s industry, many of which present similar non-GAAP financial measures. Adjusted EBITDA is EBITDA adjusted for the impact of the write off of unamortized debt discount associated with conversion of convertible notes into common stock and warrants, stock based-compensation, the impact of the fair value revaluation of our derivative liabilities and the loss on early extinguishment of debt. Non-GAAP financial measures that Myomo uses may differ from measures that other companies may use. This non-GAAP financial measure disclosed by Myomo is not meant to be considered superior to or a substitute for results of operations prepared in accordance with GAAP, and should be viewed in conjunction with, GAAP financial measures. Investors are encouraged to review the reconciliation of this non-GAAP measure to its most directly comparable GAAP financial measure. A reconciliation of GAAP to the non-GAAP financial measures has been provided in the tables included as part of this press release.
|Three months ended||
Six months ended
|Cost of revenue||200,446||98,641||308,526||177,210|
|Research and development||486,982||708,622||859,341||1,065,507|
|Selling, general and administrative||2,627,005||1,432,862||4,862,642||2,577,328|
|Total operating expenses||3,113,987||2,141,484||5,721,983||3,642,835|
|Loss from operations||(2,682,064)||(1,933,442)||(5,084,961)||(3,297,131)|
|Other expense (income)|
|Change in fair value of derivative liabilities||(2,661)||130,162||(17,968)||155,008|
|Debt discount on convertible notes||—||5,172,000||—||5,172,000|
|Interest and other expense, net||(49,842)||146,250||(92,030)||314,115|
|Total other expense (income)||(52,503)||5,448,412||(109,998)||5,641,123|
|Deemed discount – accreted preferred stock discount||—||(246,827)||—||(274,011)|
|Cumulative dividend to Series B-1 preferred stockholders||—||(125,903)||—||(287,779)|
|Net loss available to common stockholders||$||(2,629,561)||$||(7,754,584)||(4,974,963)||$||(9,500,044)|
|Weighted average number of common shares outstanding:|
|Basic and diluted||12,407,526||2,312,649||12,155,600||1,722,168|
|Net loss per share available to common stockholders:|
|Basic and diluted||$||(0.21)||$||(3.35)||(0.41)||$||(5.52)|
|CONDENSED BALANCE SHEETS|
|June 30, 2018||December 31, 2017|
|Cash and cash equivalents||$||11,683,729||$||12,959,373|
|Prepaid expenses and other||462,782||388,275|
|Total Current Assets||12,779,086||13,845,842|
|Deferred offering costs||49,042||—|
|LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIENCY)|
|Accounts payable and other accrued expenses||$||1,399,335||$||1,277,236|
|Total Current Liabilities||1,570,383||1,485,172|
|Deferred revenue, net of current portion||45,496||44,042|
|Commitments and Contingencies||—||—|
|Stockholders' Equity (Deficiency)|
|Undesignated preferred stock||—||—|
|Additional paid-in capital||51,404,071||47,423,915|
|Total Stockholders' Equity (Deficiency)||11,451,098||12,445,778|
|Total Liabilities and Stockholders’ Equity (Deficiency)||$||13,066,977||$||13,974,992|
|For the six months ended June 30,||2018||2017|
|CASH FLOWS FROM OPERATING ACTIVITIES|
|Adjustments to reconcile net loss to net cash used in operations:|
|Amortization of debt discount||—||17,765|
|Debt discount on convertible notes||—||5,172,000|
|Excess and obsolete inventory reserve||28,887||36,028|
|Common stock issued for services||—||30,000|
|Change in fair value of derivative liabilities||(17,968||)||155,008|
|Changes in operating assets and liabilities:|
|Prepaid expenses and other||(74,507||)||(121,633||)|
|Accounts payable and other accrued expenses||122,099||594,339|
|Net cash used in operating activities||(4,610,348||)||(2,747,005||)|
|CASH FLOWS FROM INVESTING ACTIVITIES|
|Purchases of equipment||(81,457||)||(4,987||)|
|Net cash used in investing activities||(81,457||)||(4,987||)|
|CASH FLOWS FROM FINANCING ACTIVITIES|
|Payments of issuance costs||(49,042||)||—|
|Net settlement of vested restricted stock units to fund related
employee statutory tax withholding
|Proceeds from exercise of stock options||2||2,982|
|Proceeds from exercise of warrants||3,556,391||—|
|Proceeds from IPO, net of offering costs (1)||—||4,423,315|
|Proceeds from private placement, net of offering costs||—||2,922,885|
|Proceeds from convertible promissory notes, net||—||1,770,000|
|Repayment of note payable, MLSC||—||(54,123||)|
|Net cash provided by financing activities||3,439,161||9,065,059|
|Net (decrease) increase in cash, cash equivalents and restricted cash||(1,252,644||)||6,313,067|
|Cash, cash equivalents and restricted cash, beginning of period||13,011,373||849,174|
|Cash, cash equivalents and restricted cash, end of period||$||11,758,729||$||7,162,241|
|SUPPLEMENTAL DISCLOSURE CASH FLOW INFORMATION|
|Cash paid during the period for interest||$||—||$||59,536|
|SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING
AND FINANCING ACTIVITIES
|Inventory capitalized as sales demo equipment||$||34,142||$||—|
|Exchange of 2015 convertible promissory notes for 2016
convertible promissory notes
|Accretion of convertible preferred stock to redemption value||$||—||$||274,011|
|Conversion of accrued interest to principal||$||—||$||21,916|
|Conversion of convertible preferred stock into common stock||$||—||$||12,946,252|
|Conversion of convertible promissory notes and accrued interest
into common stock
|Issuance of selling agent warrants in connection with IPO||$||—||$||156,725|
|Deferred offering costs to additional paid-in capital upon IPO closing (1)||$||—||$||438,237|
|IPO issuance costs included in accounts payable and accrued expense||$||—||$||31,930|
(1) IPO gross proceeds of $4,991,236 are reduced by $567,921 of IPO offering costs that were incurred in 2017. Another $438,237 of IPO deferred offering costs were paid for in 2016.
|Three months ended||Six months ended|
|June 30,||June 30,|
|GAAP net loss||$||(2,629,561)||$||(7,381,854)||$||(4,974,963)||$||(8,938,254)|
|Adjustments to reconcile to Adjusted EBITDA:|
|Interest (income) expense||(49,842)||146,057||(92,030)||286,928|
|Change in fair value of derivative liabilities||(2,661)||130,162||(17,968)||155,008|
|Debt discount on convertible notes||—||5,172,000||—||5,172,000|
Source: Myomo, Inc.