Myomo Reports 2020 First Quarter Financial Results

May 14, 2020 20:05 UTC

21% Year-Over-Year Revenue Growth; 51% Sequential Increase in Authorization Backlog

Conference call begins at 4:30 p.m. Eastern time today

CAMBRIDGE, Mass.--(BUSINESS WIRE)-- Myomo, Inc. (NYSE American: MYO) (“Myomo” or the “Company”), a wearable medical robotics company that offers increased functionality for those suffering from neurological disorders and upper-limb paralysis, today announced financial results for the first quarter ended March 31, 2020.

Financial and operational highlights include the following (all comparisons are with the first quarter of 2019 unless otherwise noted):

• Revenue was $1.0 million, up 21% compared with $0.8 million.
• Revenue from direct billing was a record 62% of total revenue, compared with 26% of total revenue.
• Gross margin increased 300 basis points to 68.4% from 65.4%.
• The reimbursement pipeline contained more than 700 MyoPro units as of March 31, 2020, compared with 594 units as of December 31, 2019.
• 72% of the MyoPro pipeline now represents direct billing units and more than 90% of the new candidates entering the pipeline during the first quarter are to be directly billed to insurance payers.
• Backlog, which represents insurance authorizations received but not yet converted to revenue, was 80 units as of March 31, 2020, a 51% increase compared with 53 units as of December 31, 2019; approximately 30% of the December 31, 2019 backlog was converted into revenue in the first quarter.

Management Commentary

“I’m pleased we were able to deliver solid topline financial results and a growing backlog in this challenging environment, where MyoPro fittings have been delayed by efforts to contain the coronavirus,” said Paul R. Gudonis, Myomo’s chairman and chief executive officer. “Our focus during the second quarter is to continue to grow our pipeline and authorizations backlog via telehealth and social media marketing, while reducing our spending as we wait for public health and travel restrictions to be eased so that we can resume fitting and delivering our MyoPro product to the growing number of patients in the queue.”

Financial Results

		For the Three Months Ended March 31,								Period-to-Period Change
		2020				2019				$			%
Revenue		$	1,008,145			$	830,066			$	178,079		21	%
Cost of revenue			318,651				286,802				31,849		11	%
Gross profit		$	689,494			$	543,264			$	146,230		27	%
Gross margin			68	%			65	%					3	%

Revenue for the first quarter of 2020 was $1.0 million, an increase of 21% compared with the first quarter of 2019. Revenue growth was achieved through a higher average selling price, reflecting a record amount of direct billing revenues, partially offset by a slightly lower number of revenue units in the first quarter of 2020, compared with the same period a year ago.

Gross margin for the first quarter of 2020 was 68%, compared with 65% for first quarter of 2019. The increase primarily reflects a higher average selling price.

Operating expenses for the first quarter of 2020 were $4.1 million, an increase of 27% over the first quarter of 2019. The increase primarily reflects higher compensation costs associated with the addition of sales, customer service and reimbursement personnel, as well as higher marketing expenses and professional service expenses.

Operating loss for the first quarter of 2020 increased to $3.4 million from $2.7 million in the first quarter of 2019. Net loss for the first quarter of 2020 was $3.8 million, compared with a net loss of $2.6 million, for the same period of 2019. Net loss in the first quarter of 2020 includes a charge of $0.2 million related to the partial extinguishment of the Company’s term loan.

Adjusted EBITDA¹ for the first quarter of 2020 was a negative $3.3 million, compared with a negative $2.5 million for the first quarter of 2019. A reconciliation of GAAP net loss to this non-GAAP financial measure appears below.

Financial Outlook

“As a result of public health mandates and travel restrictions that are temporarily constraining our revenues, we expect second quarter revenue to be substantially below first quarter revenue,” said Mr. Gudonis. “We have taken actions to reduce payroll and other costs by over $500,000 in the second quarter in order to minimize the cash burn, which nonetheless is expected to be higher in the quarter due to expected usage of cash for working capital. We are hopeful that operations will return to a more normal pace in the coming weeks. Until then, we continue to have success in building our authorization backlog, which currently stands at a record 100 MyoPro units that we intend to deliver and convert into revenue as rapidly as possible once conditions allow.”

Liquidity

Cash and cash equivalents as of March 31, 2020 were $13.7 million. Cash burn was $2.4 million for the first quarter. The Company believes it has sufficient cash to meet its operating requirements for at least the next 12 months. However, if public health and travel restrictions continue into the third quarter of 2020, the Company may require additional capital to fund its operations beyond the second quarter of 2021.

Conference Call and Webcast Information

Myomo will hold a conference call today at 4:30 p.m. ET. To access the conference call, please dial 1-844-707-6932 (U.S.) or 1-412-317-9250 (International). A webcast of the call can also be accessed at Myomo’s Investor Relations page at http://ir.myomo.com/.

A replay of the webcast will be available beginning approximately one hour after the completion of the live conference call at http://ir.myomo.com/. A dial-in replay of the call will be available until May 28, 2020; please dial 1-877-344-7529 (U.S.) or 1-412-317-0088 (International) and provide the passcode #10143817.

Non-GAAP Financial Measures

Myomo has provided in this press release 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 measure provides supplementary information for investors to use in evaluating operating performance and in comparing Myomo’s financial measures with other companies in its industry, many of which present similar non-GAAP financial measures. Adjusted EBITDA is EBITDA adjusted for stock-based compensation expense, the impact of the fair value revaluation of derivative liabilities and loss of extinguishment of debt. This non-GAAP financial measure 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.

About Myomo

Myomo, Inc. is a wearable medical robotics company that offers improved arm and hand function 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 certain 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. and representatives internationally. For more information, please visit www.myomo.com.

Forward-Looking Statements

This press release contains forward-looking statements regarding the Company’s future business expectations, including the impact of COVID-19 on the Company’s revenues in the second quarter of 2020 and beyond, its current authorization backlog and its cash runway, 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:

• the direct and indirect impact of the novel coronavirus (COVID-19) on our business and operations, including fabrication and delivery, sales, patient consultations, supply chain, manufacturing, insurance reimbursements and employees;
• our ability to resume normal operations and resume interactions with patients in order to cast, deliver and fit our custom-fabricated device, which is impacting our ability to generate revenues;
• 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, to the extent that we do not achieve or maintain cash flow breakeven;
• our ability to effectively execute our business plan and scale up our operations;
• our expectations as to our development programs, and;
• general market, economic, environmental and social factors that may affect the evaluation, fitting, delivery and sale of our products to patients.

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, 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.

 

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¹ Adjusted EBITDA is earnings before interest, taxes, depreciation and amortization adjusted for stock-based compensation expense, the impact of the fair value revaluation of derivative liabilities and loss on extinguishment of debt.

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