Myomo Third Quarter Financial Results Feature Record Revenue of $1.9 Million, up 218% Over the Prior Year

Nov. 10, 2020 21:05 UTC

 

Authorization backlog at a record 162 units, up 35% sequentially

Cash utilization of $1.8 million, lowest since scale-up activities began in 2018

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 three and nine months ended September 30, 2020.

Financial and operational highlights for the third quarter of 2020 include the following (all comparisons are with the third quarter of 2019, unless otherwise noted):

  • Revenue was up 218% to a record $1.9 million with revenue units up 123% to a record 51 and a sequential increase in average selling price
  • Revenue from the direct billing channel increased more than six-fold and represented 68% of total revenue
  • Gross margin was 56%, up from 46% in the third quarter of 2019 and 51% in the second quarter of 2020
  • The reimbursement pipeline had more than 750 MyoPro units as of September 30, 2020, with nearly 230 candidates entering the pipeline during the third quarter
  • The MyoPro direct billing pipeline now represents nearly 70% of reimbursement pipeline units, and more than 95% of those entering the domestic pipeline during the third quarter are direct-bill candidates
  • Backlog, which represents insurance authorizations received but not yet converted to revenue, was 162 units as of September 30, 2020, a 35% increase compared with 120 units as of June 30, 2020
  • Insurance companies authorized a record 98 patients to receive a MyoPro during the third quarter

Management Commentary

“We achieved record revenue in the third quarter with deliveries of MyoPros authorized for insurance reimbursement at their highest level ever. As COVID-19 restrictions were lifted beginning mid-year, we were able to fit devices on patients while also securing a large number of new authorizations for patients in our pipeline,” stated Paul R. Gudonis, Myomo’s chairman and chief executive officer. “The shift to direct billing is supporting both revenue growth and margin improvement, while our ongoing digital transformation helped us grow our pipeline and backlog via telehealth and social media marketing. As a result, Myomo entered the fourth quarter with a record backlog of MyoPros to provide to patients and submit to insurers for payment,” he added.

Financial Results

   

For the Three Months
Ended September 30,

 

Period-to-Period
Change

 

For the Nine Months
Ended September 30,

 

Period-to-Period
Change

   

2020

 

2019

 

$

 

%

 

2020

 

2019

 

$

 

%

Revenue

 

$

1,926,660

 

$

606,619

 

$

1,320,041

 

218%

 

$

3,793,395

 

$

2,317,034

 

$

1,476,361

 

64%

Cost of revenue

 

 

855,338

 

 

329,227

 

 

526,111

 

160%

 

 

1,592,851

 

 

996,121

 

 

596,730

 

60%

Gross profit

 

$

1,071,322

 

$

277,392

 

$

793,930

 

286%

 

$

2,200,544

 

$

1,320,913

 

$

879,631

 

67%

Gross margin

 

 

56%

 

 

46%

     

10%

 

 

58%

 

 

57%

     

1%

Revenue for the third quarter of 2020 was $1.9 million, an increase of 218% compared with the third quarter of 2019, due to a higher average selling price and a higher number of revenue units. Myomo recognized revenue on 51 units in the third quarter of 2020, an increase of 132% compared with the third quarter of 2019. Year-to-date revenue of $3.8 million was up 64% over the prior-year period.

Gross margin for the third quarter of 2020 was 56%, compared with 46% for the third quarter of 2019. The increase primarily reflects a higher average selling price, partially offset by cost of revenues recognized in the third quarter of 2020 for shipments to patients that are expected to be recognized as revenue in future periods. The Company shipped 97 units to patients in the third quarter, compared to 51 revenue units. Year-to-date gross margin was 58%, up slightly compared with the prior-year period.

Operating expenses for the third quarter of 2020 were $3.6 million, an increase of 17% over the third quarter of 2019. The increase primarily reflects higher compensation expenses associated with the addition of clinical field staff, customer service and reimbursement personnel. Nearly all employees furloughed during the second quarter of 2020 returned to work during the third quarter. Year-to-date operating expenses were $11.0 million, an increase of 16% over the comparable period a year ago.

Operating loss for the third quarter of 2020 decreased to $2.5 million from $2.8 million for the third quarter of 2019. Net loss for the third quarter of 2020 was $2.8 million, or $0.70 per share, compared with a net loss of $2.8 million, or $4.87 per share, for the same period of 2019. Year-to-date operating and net losses were $8.8 million and $9.9 million, respectively. Net losses for the third quarter and first nine months of 2020 include charges of $0.2 million and $0.7 million, respectively, related to the partial extinguishment of the Company’s convertible note.

Adjusted EBITDA1 for the third quarter of 2020 was negative $2.3 million, compared with negative $2.7 million for the third quarter of 2019. Year-to-date Adjusted EBITDA was a negative $8.3 million, compared with a negative $7.4 million in the same period a year ago. A reconciliation of GAAP net loss to this non-GAAP financial measure appears below.

____________________
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.

Business Outlook

“Our nine-month 2020 revenue is equivalent to our full-year 2019 revenue, and therefore we expect strong growth for the year as we convert units in our growing backlog into revenue in the fourth quarter,” stated Mr. Gudonis. “Our dedicated staff has been provided with personal protective equipment (PPE) and training on proper and safe procedures, and we also have PPE available for patients during the MyoPro fitting process.

“During the third quarter, a new case study on the positive outcome from the use of the MyoPro that was conducted at a U.S. Department of Veterans Affairs Medical Center was published in the Journal of Rehabilitation and Assistive Technologies Engineering. The case study showed that despite long-standing traumatic brain injury, meaningful improvements in motor function were observed,” Mr. Gudonis added. “In addition, new patents were issued, bolstering our intellectual property portfolio and extending it to 2039. We expect to continue growing the pipeline of MyoPro candidates and seeking insurance reimbursement so that our customers may achieve greater independence, perform the activities of daily living and reduce their overall healthcare costs.”

Liquidity

Cash and cash equivalents as of September 30, 2020 were $13.3 million. Cash utilization was $1.8 million in the third quarter of 2020, which was the lowest level since the fourth quarter of 2017, prior to investments made to scale the business. Cash utilization is expected to increase in the fourth quarter due to a deposit required to be paid to one of the Company’s contract manufacturing partners to support planned MyoPro unit volumes in 2021.

“With proceeds received from sales of common stock under our At-Market Sales Facility and considering the recent repayment in full of our convertible note, we believe we have sufficient cash to fund operations through the fourth quarter of 2021, which is our target to achieve cash flow breakeven on a quarterly basis,” stated David Henry, chief financial officer. “Assuming public health and travel restrictions are not re-imposed due to the continuing spread of COVID-19 pandemic, we do not expect to undertake any further dilutive financing activities in the near term,” he added.

Conference Call and Webcast Information

Myomo will hold a conference call today at 4:30 p.m. ET. We encourage participants to pre-register for the call using the following link: https://dpregister.com/sreg/10149359/dbc610ea05. Callers who pre-register will be given a conference passcode and unique PIN to gain immediate access to the call and bypass the live operator. Participants may pre-register at any time, including up to and after the call start time. Those without internet access or unable to pre-register may participate by dialing 1-844-707-6932 (U.S.) or 1-412-317-9250 (International). A webcast of the call can 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 telephone replay of the call will be available until November 24, 2020; please dial 1-877-344-7529 (U.S.) or 1-412-317-0088 (International) and provide the passcode #10149359.

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 expectations for record revenues in the fourth quarter, the impact of COVID-19 on the Company’s business, its current authorization backlog and its cash runway and capital requirements, 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 continue normal operations and patient interactions in order to cast, deliver and fit our custom-fabricated device;
  • 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.

(tables to follow)

MYOMO, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                 
   

For the Three Months Ended September 30,

 

For the Nine Months Ended September 30,

   

2020

 

2019

 

2020

 

2019

Revenue  

$

1,926,660

 

 

$

606,619

 

 

$

3,793,395

 

 

$

2,317,034

 

Cost of revenue  

 

855,338

 

 

 

329,227

 

 

 

1,592,851

 

 

 

996,121

 

Gross profit  

 

1,071,322

 

 

 

277,392

 

 

 

2,200,544

 

 

 

1,320,913

 

Operating expenses:                
Research and development  

 

345,666

 

 

 

433,065

 

 

 

1,250,430

 

 

 

1,306,986

 

Selling, general and administrative  

 

3,270,757

 

 

 

2,669,375

 

 

 

9,766,189

 

 

 

8,228,114

 

   

 

3,616,423

 

 

 

3,102,440

 

 

 

11,016,619

 

 

 

9,535,100

 

                 
Loss from operations  

 

(2,545,101

)

 

 

(2,825,048

)

 

 

(8,816,075

)

 

 

(8,214,187

)

                 
Other expense (income)                
Change in fair value of derivative liabilities  

 

(888

)

 

 

(14,536

)

 

 

(122,706

)

 

 

(155,955

)

Interest (income) expense and other expense, net  

 

29,915

 

 

 

(22,394

)

 

 

254,039

 

 

 

(106,727

)

Non-cash interest expense, debt discount  

 

12,135

 

 

 

 

 

 

218,803

 

 

 

 

Loss on extinguishment of debt  

 

189,155

 

 

 

 

 

 

696,436

 

 

 

 

   

 

230,317

 

 

 

(36,930

)

 

 

1,046,572

 

 

 

(262,682

)

                 
Loss before income taxes  

 

(2,775,418

)

 

 

(2,788,118

)

 

 

(9,862,647

)

 

 

(7,951,505

)

Income tax expense  

 

1,153

 

 

 

 

 

 

2,851

 

 

 

 

Net loss  

$

(2,776,571

)

 

$

(2,788,118

)

 

$

(9,865,498

)

 

$

(7,951,505

)

                 
Deemed dividend on repricing of warrants  

 

 

 

 

 

 

 

(670,632

)

 

 

(797,637

)

                 
Net loss attributable to common stockholders  

$

(2,776,571

)

 

$

(2,788,118

)

 

$

(10,536,130

)

 

$

(8,749,142

)

                 
Weighted average number of common shares outstanding:                
Basic and diluted  

 

3,940,113

 

 

 

571,957

 

 

 

2,901,398

 

 

 

547,091

 

Net loss per share attributable to common stockholders (1)                
Basic and diluted  

$

(0.70

)

 

$

(4.87

)

 

$

(3.63

)

 

$

(15.99

)

                 
(1) Share and per share amounts have been restated to give effect to the Company's 1-for-30 reverse stock split effected January 30, 2020

 

MYOMO, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

         
    September 30,
2020
  December 31,
2019
ASSETS        
Current Assets:        
Cash and cash equivalents  

$

13,317,581

 

 

$

4,465,455

 

Accounts receivable, net  

 

308,523

 

 

 

424,287

 

Inventories, net  

 

759,803

 

 

 

439,533

 

Prepaid expenses and other current assets  

 

790,290

 

 

 

820,206

 

Total Current Assets  

 

15,176,197

 

 

 

6,149,481

 

Restricted cash  

 

75,000

 

 

 

75,000

 

Deferred offering costs  

 

 

 

 

219,240

 

Equipment, net  

 

105,589

 

 

 

154,972

 

Total Assets  

$

15,356,786

 

 

$

6,598,693

 

LIABILITIES AND STOCKHOLDERS’ EQUITY        
Current Liabilities:        
Current note payable, net of discount of $552 and $676,703 at September 30, 2020 and December 31, 2019, respectively  

$

78,045

 

 

$

1,763,887

 

Accounts payable and accrued expenses  

 

2,122,140

 

 

 

1,738,490

 

Derivative liabilities  

 

 

 

 

378,239

 

Deferred revenue  

 

6,684

 

 

 

2,913

 

Total Current Liabilities  

 

2,206,869

 

 

 

3,883,529

 

Long-term debt, net of discount of $36,169 at December 31, 2019  

 

 

 

 

888,961

 

Deferred revenue  

 

1,495

 

 

 

1,495

 

Other long-term liabilities  

 

165,889

 

 

 

 

Total Liabilities  

 

2,374,253

 

 

 

4,773,985

 

Commitments and Contingencies        
Stockholders’ Equity:        
Common stock  

 

454

 

 

 

57

 

Additional paid-in capital  

 

78,980,023

 

 

 

57,957,097

 

Accumulated deficit  

 

(65,991,480

)

 

 

(56,125,982

)

Treasury stock, at cost  

 

(6,464

)

 

 

(6,464

)

Total Stockholders’ Equity  

 

12,982,533

 

 

 

1,824,708

 

Total Liabilities and Stockholders’ Equity  

$

15,356,786

 

 

$

6,598,693

 

         
MYOMO, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
         
Nine Months Ended September 30,  

2020

 

2019

CASH FLOWS FROM OPERATING ACTIVITIES        
Net loss  

$

(9,865,498

)

 

$

(7,951,505

)

Adjustments to reconcile net loss to net cash used in operations:        
Depreciation  

 

79,729

 

 

 

70,678

 

Stock-based compensation  

 

411,192

 

 

 

740,304

 

Bad debt expense  

 

29,839

 

 

 

 

Non-cash interest expense, debt discount  

 

218,803

 

 

 

 

Amortization of original issue discount and debt restructuring fee  

 

161,869

 

 

 

 

Loss on extinguishment of debt  

 

696,436

 

 

 

 

Change in fair value of derivative liabilities  

 

(122,706

)

 

 

(155,955

)

Loss on disposal of asset  

 

177

 

 

 

2,481

 

Other non-cash charges  

 

(2,326

)

 

 

14,634

 

Changes in operating assets and liabilities:        
Accounts receivable  

 

85,925

 

 

 

248,252

 

Inventories  

 

(324,234

)

 

 

(302,608

)

Prepaid expenses and other current assets  

 

30,020

 

 

 

(130,268

)

Other assets  

 

57,987

 

 

 

(2,000

)

Accounts payable and accrued expenses  

 

494,311

 

 

 

(191,120

)

Deferred revenue  

 

3,771

 

 

 

2,447

 

Other liabilities  

 

165,889

 

 

 

(43,042

)

Net cash used in operating activities  

 

(7,878,816

)

 

 

(7,697,702

)

CASH USED IN INVESTING ACTIVITIES  

 

(30,294

)

 

 

(38,261

)

CASH PROVIDED BY FINANCING ACTIVITIES  

 

16,761,653

 

 

 

5,523,524

 

Effect of foreign exchange rate changes on cash  

 

(417

)

 

 

 

         
Net increase in cash, cash equivalents and restricted cash  

 

8,852,126

 

 

 

(2,212,439

)

         
Cash, cash equivalents and restricted cash, beginning of period  

 

4,540,455

 

 

 

6,615,794

 

         
Cash, cash equivalents and restricted cash, end of period  

$

13,392,581

 

 

$

4,403,355

 

         
MYOMO, INC.
RECONCILIATION OF GAAP NET LOSS TO ADJUSTED EBITDA
(unaudited)
                 
   

For the Three Months
Ended September 30,

 

For the Nine Months
Ended September 30,

   

2020

 

2019

 

2020

 

2019

GAAP net loss  

$

(2,776,571

)

 

$

(2,788,118

)

 

$

(9,865,498

)

 

$

(7,951,505

)

Adjustments to reconcile to Adjusted EBITDA:                
Interest (income) expense and other expense, net  

 

29,915

 

 

 

(22,394

)

 

 

254,039

 

 

 

(106,727

)

Non-cash interest expense, debt discount  

 

12,135

 

 

 

 

 

 

218,803

 

 

 

 

Loss on extinguishment of debt  

 

189,155

 

 

 

 

 

 

696,436

 

 

 

 

Depreciation expense  

 

26,707

 

 

 

25,602

 

 

 

79,729

 

 

 

70,678

 

Stock-based compensation  

 

181,702

 

 

 

146,951

 

 

 

411,192

 

 

 

740,304

 

Change in fair value of derivative liabilities  

 

(888

)

 

 

(14,536

)

 

 

(122,706

)

 

 

(155,955

)

Income tax expense  

 

1,153

 

 

 

 

 

 

2,851

 

 

 

 

Adjusted EBITDA  

$

(2,336,692

)

 

$

(2,652,495

)

 

$

(8,325,154

)

 

$

(7,403,205

)

                 

 

Contacts

For Myomo:
ir@myomo.com

Investor Relations:
Kim Sutton Golodetz
LHA Investor Relations
kgolodetz@lhai.com
212-838-3777

Public Relations:
Kate McCann
Matter Communications
myomo@matternow.com

 
 

Source: Myomo, Inc.

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