Q4 2023 Myomo Inc Earnings Call
Operator: Good day, and welcome to the Myomo fourth quarter 2023 conference call. All participants will be in a listen-only mode.
Good day and welcome to the Myanmar fourth quarter 2023 conference call all participants will be in a listen only mode should you need assistance. Please signal a conference specialist by pressing the star key followed by zero.
Operator: Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press the star key, then 1 on your touch-tone phone.
After today's presentation there'll be an opportunity to ask questions.
To ask a question you May Press Star then one on your Touchtone phone.
Operator: To withdraw your question, please press star then 2. Please note, this event is being recorded. I would now like to turn the conference over to Kim Golodetz. Please go ahead.
She was draw your question. Please press Star then two.
Please note this event is being recorded.
I would now like to turn the conference over to Kim Garland that Golar. That's please go ahead.
Kim Golodetz: Thank you, operator, and good afternoon, everyone. This is Kim Golodetz with LHA. Welcome to the Myomo fourth quarter 2023 conference call. Earlier this afternoon, Myomo issued a news release announcing financial results for the three months and year ended December 31, 2023. If you would like to be added to the company's e-mail list, please do so now. Please register on the company's website at www.myomo.com or call LHA at 212-838-3777 and speak with Carolyn Curran.
Thank you operator, and good afternoon, everyone. This is Kim gala that L. A today welcome to the Myanmar fourth quarter 2023 conference call.
Earlier this afternoon, Miami unless you Didnt news release announcing financial results for the three months and year ended December 31st 2023, if you would like to be added to the company's Eaton here the company's email distribution list to receive future announcements. Please register on the company's website at Miami Dot Com our call.
L. A J at 21283837, 77 and speak with Carolyn Curran.
Kim Golodetz: With me on today's call from Myomo are Paul Gudonis, Chief Executive Officer, and Dave Henry, Chief Financial Officer. Before we begin, I'd like to caution listeners that statements made during this conference call by management other than historical facts are forward-looking. The words anticipate, believe, estimate, expect, intend, guidance, outlook, confidence, target, project, and other similar expressions are typically used to identify such forward-looking statements.
With me on today's call from Miami, or Paul Mcdonough, Chief Executive Officer, and Dave Henry Chief Financial Officer.
Before we begin I'd like to caution listeners that statements made during this conference call by management other than historical facts are forward looking statements.
Words anticipate believe estimate expect intend guidance outlook confidence target project and other similar expressions are typically used to identify such forward looking statements.
Kim Golodetz: These forward-looking statements are not guarantees of future performance and may involve and are subject to certain risks and uncertainties and other factors that may affect Myomo's business, financial condition, and operating results. These and additional risks, uncertainties, and other factors are discussed in Myomo's filings with the Securities and Exchange Commission, including the Form 10-K for the year ended December 31, 2023, and subsequent filings. Actual outcomes and results may differ materially from what's expressed in or implied by these forward-looking statements. Except as required by law, Myomo undertakes no obligation to revise or update any forward-looking statements to reflect events or circumstances after the date of this call. It is now my pleasure to turn the call over to Myomo CEO, Paul Gudonis. Paul, please go ahead. Thanks, Kim.
These forward looking statements are not guarantees of future performance and may involve and are subject to certain risks uncertainties and other factors that may affect my amo business financial condition and operating results.
These and additional risks uncertainties and other factors are discussed in my almost filings with the Securities and Exchange Commission, including the Form 10-K for the year ended December 31st 2023, and subsequent filings actual outcomes and results may differ materially from what is expressed in or implied by these forward looking state.
Except as required by law, Myanmar undertakes no obligation to revise or update any forward looking statements to reflect events or circumstances. After the date of this call.
It is now my pleasure to turn the call over to my almost CEO Paul go Donna Paul. Please go ahead.
Thanks, Ken Good afternoon, everyone and thank you for joining us.
Paul R. Gudonis: Well, good afternoon, everyone, and thank you for joining us. Since we announced some very positive developments with CMS last week, I'll start today's call by discussing the new MyoPro Pricing for Patients Covered by Medicare Part B. Then we'll review our operational results for the fourth quarter and calendar year 2023. Last week, the Centers for Medicare and Medicaid Services, or CMS, finalized the pricing for the MyoPro product line, which will go into effect for deliveries as of April 1st this year. We issued a press release on March 1st with details of the pricing and a link to the CMS document describing the rationale. The MyoPro Model G, which is coded as L8702, is to be reimbursed with a lump sum payment of $65,872. And the MyoPro Model W, which is coded as L8701, is to be reimbursed with a lump sum payment of $33,481. The Model G, which includes the elbow, wrist, and grasp function, represents more than 90% of our unit volume for sales directly to patients and to orthotics and prosthetics clinics.
We announced some very positive developments with CMS last week I'll start today's call by discussing the new buyer pool pricing for patients covered by Medicare part D that we will review our operational results for the fourth quarter and calendar year 2023.
Last week, the centers for Medicare and Medicaid services or CMS finalized the pricing for the <unk> product line, which will go into effect for deliveries as of April 1st of this year.
Issued a press release on March 1st with detailed pricing and a link to the CMS document describing the rationale.
Microbiology, which is totally this L 80, 702 used to be reimbursed as a lump sum payment of $65872 and the Micropro model Delphi, which is coded as <unk> 87 to one used to be reimbursed as a lump sum payment of $32481.
<unk> G, which includes the elbow wrist and grabs function represents more than 90% of our unit volume or sales directly to patients at orthotics and prosthetics clinics.
Paul R. Gudonis: These amounts are slightly higher than what CMS proposed back in November as they added the Medicare inflation factor for the current year's calculation. These amounts are the average fee to be paid by Medicare for MyoPro, and CMS will publish a more detailed fee schedule that describes the pricing for various state locations based on local cost factors. It's been a long journey to reach this point where we can serve patients with arm paralysis who are covered by Medicare Part B health insurance, and we're delighted that you've arrived.
These amounts are slightly higher than what CMS proposed back in November as we added the Medicare inflation factor for the current year into their calculations.
The average fee to be paid by Medicare for my approach and Cmos, who have published more detailed schedule that prescribes the pricing for various state locations based on local cost factors.
It's been a long journey to reach this point, where we can serve patients with our paralysis, who are covered by Medicare part B health insurance and we'd go wider and deeper lives.
Paul R. Gudonis: Achieving this milestone is a transformational moment for patients and the company that opens up a new world for these stroke survivors and others who've been told they'll never be able to use their arm or hand again for the rest of their lives. We testified at the CMS public hearing in June 2022 that the MyoPro should be correctly classified in the brace category and not as a durable medical equipment rental item like a wheelchair. After a rulemaking procedure, CMS agreed with us and announced in 2023 that the MyoPro, as a custom-fabricated brace for long-term use in the home, should be included in the expanded definition of the brace category.
This milestone is a transformational moment for patients and the company and opens up a new rotary stroke survivors and others who've been told well never be able to use your arm or handicap for the rest of your life.
We testified at the CNS public hearing in June 2022.
I approach it correctly classified in the brake category and not as a durable medical equipment rental items like the wheelchair and after a rulemaking procedure CMS agreed with us and announced in 'twenty to 'twenty three with the mindful as we can.
Custom fabricated braced for long term use of a home should be included is expanded definition of the <unk> category.
Paul R. Gudonis: A year ago, we met with the DME MAC medical directors and shared our research about the valuable outcomes that were achieved by Medicare age beneficiaries, and we were encouraged to deliver myoprosis to this population and then submit claims. To date, we've had over 20 claims paid by Medicare, some as a rental, the rest as long-sum from deliveries after January 1st, where the patient's physician has ordered the device, and where medical necessity for the MyoPro has been established. This was the first time that Medicare paid for myopropriations for seniors with standard Part B coverage.
A year ago, we met with the math easy Mac medical directors and shared our research about the valuable outcomes that were achieved by Medicare aged beneficiaries and we were encouraged to deliver my approach to this population and then submit claims.
To date, we've had over 20 claims paid by Medicare and some of the rental the rest is lump sum from deliveries after January one.
Or the patient physician has ordered the device and where medical necessity for the micro has been established.
This was the first time that Medicare pays for bio appropriations for seniors with standard part D coverage and while some of these payments from several regional Macs was significantly less than the new fees, we expect to be paid the correct amount of new deliveries after April 1st.
Paul R. Gudonis: And while some of these payments from several regional MACs were significantly less than the new fee, we expect to be paid the correct amount for new deliveries after April 1st. And in November 2023, CMS published its proposed pricing for the MyoPro billing codes as part of its semi-annual HCPCS public meeting. And last week's publication of the finalized fees is the culmination of this process, so we can confidently go forward to meet the medical needs of Part B patient populations. We commend CNS on making these benefits greatly available to seniors with heartbeat coverage, as it's also a major step towards the goal of health equity. So, during the fourth quarter, we could tell parking patient candidates that they were eligible for a MyoPro if they were medically qualified and had a doctor's order with supporting medical documentation to warrant a MyoPro arm.
And in November 2023, CMS published its proposed pricing for the micro billing codes as part of its semiannual picks public meeting unless these publications will finalize sees is the culmination of this process.
Constantly go forward to meet the medical needs of part D patient population.
<unk> seen us in making these races available seniors with part D. Coverage is also a major step towards the goal of health equity.
So during the fourth quarter, we consult part D patient candidates.
Eligible for my approach if they were medically qualified and had a doctor's order with supporting medical documentation to warrant the micropro embrace.
Paul R. Gudonis: We began shifting our clinical resources to evaluate and engage with these candidates, and we had approximately 150 Medicare Part B patients in our patient pipeline as of December 31st, 2023. Overall, we grew our pipeline to more than 1,000 patients by the end of the year, and our backlog, which includes Medicare Part B patients awaiting delivery of their devices, grew to 230 units, which is up 40% from the end of 2022. And with Medicare Part B patients now eligible for MyoPro, we had a record 183 authorizations and orders in the fourth quarter, up 87% from the same period a year ago. Dave Henry, our CFO, will go over these financial details in a few minutes. When we entered 2023, we didn't know if and when Medicare would reclassify MyoPro as a powered arm brace.
We began shifting our clinical resources to evaluate and engage with these Kansas and had approximately 150 Medicare part D patients and our patient pipeline as of December 31, 2023. Overall, we grew our pipeline to more than 1000 patients by the end of the year and our backlog, which includes Medicare part D patients.
Since the weighted delivery there twice due to 230 units, which is up 40% from the end of 2022.
And the Medicare part D patients now eligible for loyal Pro we had a record 183 authorizations in orders in the fourth quarter up 87% for the same period, a year ago, Dave Henry Our CFO will go over the financial details in a few minutes.
When we entered 2023, we didn't know if in one Medicare we reclassified the milepost powered our base. We didn't know if the medical directors of approved coverage for part D beneficiaries.
Paul R. Gudonis: We didn't know if the medical directors would approve coverage for Part B beneficiaries, and we didn't know how much they would reimburse for the device. So, at that time, we decided to focus on reliable payers, such as certain Medicare Advantage plans, and reduce our cash burden during the year while waiting for these decisions. We took down our headcount by 12% early in the year and reduced our advertising expenses by nearly $1 million.
Didn't know how to reimburse for the devices.
So at that time, we decided to focus on reliable payers such as certain Medicare advantage plans and reduce our cash burn during the year, while waiting for these decisions.
We took down our head count by 12% earlier in the year and reduced our advertising expenses by nearly $1 million yet.
Paul R. Gudonis: Yet we still grew our product revenues by 20% year over year. We added license revenue from our China joint venture. And we cut our cash-ins and operations by nearly 40%, down to $6.2 million for the year from over $10 million in the year before.
And yet we still grew our product revenues by 20% year over year.
License revenue from our China joint venture and we trust our cash used in operations by nearly 40% down to $6 2 million for the year from the.
Over $10 million a year before.
Dave Henry: We delivered over 400 MyoPros to patients in the U.S., Germany, and several other international markets last year, and we became more efficient with our marketing, reducing the cost for pipeline ads while operating with fewer staff. Overall, we achieved more than $19 million in revenue in 2023, our 11th consecutive year of revenue growth. I'll now turn it over to Dave for a detailed financial review of the quarter and our 2024 outlook, and I'll come back to outline our operational plans for the rest of this year. Thank you, Paul, and good afternoon, everyone.
We delivered over 400 my approach to patients in the U S, Germany and several other international markets last year, we became more efficient with our marketing reducing the cost for pipeline add while operating with fewer staff members overall, we achieved more than $19 million in revenue in 2023, our 11th consecutive year of revenue.
Thanks.
I'll now turn it over to Dave for detailed financial review of the quarter and our 'twenty 'twenty four outlook, then I'll come back to outline our operational plans for the rest of this year.
Thank you Paul and good afternoon, let me start my remarks, with a review of our fourth quarter financial results.
Dave Henry: Let me start my remarks with a review of our fourth quarter financial results. Total revenue for the fourth quarter of 2023 was $4.8 million. This consists entirely of product revenue, which was up 18% over the prior year quarter. This growth was driven by a higher number of revenue units, which were up 6% over the 2022 fourth quarter, and a higher average selling price for ASX. Revenue for the fourth quarter includes payments received on seven Medicare Part B rental services. Of the 107 revenue units in the fourth quarter, approximately 32% resulted in fill, which is our term for authorizations received and orders converted to revenue. Sixty-five percent of our revenue in the fourth quarter came from the direct billing channel compared to seventy-three percent in the same quarter last year. A record 23% of Ford Florida revenue came from international locations, primarily to. Of our direct billing revenue, 68% was from patients with payers who were able to recognize revenue from delivery compared to 44%. Europe, or
Total revenue for the fourth quarter of 2023 was $4 8 million, which consists entirely.
<unk> revenue, which was up 18% over the prior year quarter.
This growth was driven by a higher number of revenue units, which were up 6% over the 2022 fourth quarter, but at a higher average selling price for ASP.
Revenue for the fourth quarter, whose payments received on certain Medicare part B.
Of the 107 rental units revenue units in the fourth quarter, approximately 32% result.
Which is our term for authorization is received and orders converted to revenue in the same quarter.
65% of our revenue in the fourth quarter came from the direct selling channel compared to a 73% the same quarter a year ago.
A record 23% of fourth quarter revenue came from international locations, primarily Germany.
Of our direct selling revenue was 68% was for patients with Payors.
We're able to recognize revenue delivery compared with 44%.
Year ago quarter.
Dave Henry: ASP was approximately $44,500, up 11% from the prior year. In the fourth quarter of 2023, we undertook efforts to fill the pipeline and backlog with Medicare Part B patients. Potentially because, effective on January 1st, 2024, Medicare Part B patients can be billed on a lump sum basis. Reported backlog now represents insurance authorizations and orders received but not yet converted to revenue. And in the case of Medicare patients, those patients for whom we've collected medical records and deemed qualified for delivery based on our inclusion criteria.
ASP was approximately $44500 up 11% from the prior year.
In the fourth quarter of 2023, we undertook efforts to fill the pipeline and backlog with Medicare part D patients, particularly because effective on January one 2020 for Medicare part B patients can be built on a lump sum basis.
<unk> backlog now represents insurance authorizations in orders received but not yet converted to revenue and then the case that Medicare patients those patients currently collecting medical records and the qualified for deliberate based on our inclusion criteria.
Dave Henry: Our backlog at the end of fourth quarter 2023 was a record 230 patients, which was up 40% from our backlog at the end of the fourth quarter. The fourth quarter backlog includes 44 Medicare Part B patients that have either been qualified for delivery with appropriate medical documentation, have received a MyoProbe, and claims have been filed that payments have not yet been received, or those have received a MyoProbe and we're waiting, and we're continuing to receive. These additional Part B patients added to the backlog contributed to a record 183 authorizations, orders, and other additions to the backlog in As of today, approximately 40 claims have been filed with DMV Max, and 21 have been paid, either in the form of continuing rental payments from claims filed before December 31, 2023, or lump-sum payments for claims filed after January 1, 2023.
Our backlog at the end of fourth quarter 2023 was a record 230 patients, which was up 40% from our backlog at the end of the fourth quarter of 2022.
Fourth quarter backlog includes 44, Medicare part D patients that have either been qualified for delivery of appropriate medical documentation.
We received a micro and claims have been filed that payments are not at risk.
C or those have received my approach and are awaiting animals, receiving continuing rental payments.
These additional RP patients added to the backlog contributed to a record 183 authorizations orders and other additions to the backlog in the fourth quarter, because that 87% over the prior year quarter.
As of today, approximately 40 claims have been filed with the AAV Max at 21 eight either in the form of a continue with rental payments from claims filed before December 31 23.
Three or lump sum payments for claims filed after January one 2024.
Dave Henry: Payments have been made by all four billing companies, and remaining unpaid claims are under review by. Our patient pipeline increased to 1,042 candidates as of year-end 2023, up 18% from year-end. 381 patients were added to our pipeline during the fourth quarter, an increase of 17% over the prior year. These pipeline additions included approximately 150 Medicare Part B patients. With our patient evaluation capacity in the fourth quarter consistent with prior quarters, we prioritize adding Medicare Part B patients to the pipeline. We prioritize these patients because they can be converted to revenue faster than patients with Medicare Advantage and other commercial insurance because there is no pre-authorization required to deliver a Medicare benefit to a Benecared Part B beneficiary.
Rents have been made by all four regions remaining unpaid claims are under review by the team.
Our patient pipeline increased to 1042 candidates adds up your FY2023 up 18% from year end 2022.
381 patients were added to our pipeline during the fourth quarter, an increase of 17% over the prior year.
This pipeline additions included approximately 150, Medicare part D patients.
With our patient evaluation capacity in the fourth quarter consistent with prior quarters, we prioritized, adding Medicare part b patients to the pipeline. We prioritize these patients because they can be converted to revenue faster that patients with Medicare advantage and other commercial insurance plans because there is no pre authorization required to fill.
Weber of Medicare to a better care primary beneficiary.
Dave Henry: Gross margin for the fourth quarter of 2023 was 65.3%, compared with 65% for the prior year. The increase was driven primarily by a higher ESP offset of some cost. Operating expenses for the fourth quarter of 2023 were $5.5 million, an increase of 14% compared with the fourth quarter of 2022. This increase was driven primarily by higher outside development spending to accelerate the completion of certain sustaining engineering projects and higher incentive compensation of goals, offset by a 17% decline in advertising revenue. Our cost per pipeline add was $2,246, which is down 16% compared with the prior year quarter. The operating loss for the fourth quarter of 2023 was $2.4 million, compared with an operating loss of $2.2 million for the fourth quarter of 2022. The net loss for the fourth quarter of 2023 was $2.5 million, or $0.07 per share. This compares to a net loss of $2.2 million, or $0.29 per share, for the fourth quarter of 2018.
Gross margin for the fourth quarter of 2023% to 65, 3% compared with 65% from the prior year quarter.
The increase was driven primarily by higher ESP offset cost increases.
Operating expenses for the fourth quarter of $2023 $5 5 million, an increase of 14% compared with the fourth quarter of 2022.
This increase was driven primarily by higher upside development spending to it to accelerate completion of certain sustaining engineering projects and higher incentive compensation accruals offset by a 17% decline in advertising expense.
Our cost per pipeline add was $2246, which is down 16% compared to the prior year quarter.
The operating loss for the fourth quarter of 2023 was $2 4 million compared with an operating loss of $2 2 million for the fourth quarter of 2022.
Net loss for the fourth quarter of 2023 was $2 5 million or <unk> <unk> per share. This compares with a net loss of $2 2 million or <unk> 29 per share for the fourth quarter of 2022.
Dave Henry: Note that the $8.2 million pre-funded warrants outstanding from our January and August 2023 offerings are considered common stock equivalents under GAAP and are included on our weighted average shares outstanding, approximately 479,000 pre-funded warrants for exercise during the fourth quarter. Adjusted EBITDA for the fourth quarter of 2023 was a negative $2.1 million, compared with a negative $1.9 million for the fourth quarter of 2020. To summarize our full-year results, revenue for 2023 was $19.2 million, up 24% compared to 2022, while 2023 product revenue of $17.5 million was up 24% compared to 2022. The gross margin for 2023 was 68.5% compared to 65.9%. Gross margin on product sales for 2023 was 65.3%, compared to 63.6%. Operating expenses for 2023 were $21.4 million, an increase of 2% compared to 2021. Operating loss for 2023 was 8.2 million compared with an operating loss of 10.7. Net loss for 2023 was $8.1 million, or $0.28 per share, compared with a net loss of $10.7 million, or $1.52 per share. And Justin Bieberdahl had a negative 7 million for 2023, compared with a negative 9.3 million.
Note that the $8 2 million pre funded warrants outstanding from our January and August 2023 offerings are considered common stock equivalents under GAAP and are included on our weighted average shares outstanding.
Approximately 479 pre funded warrants were exercised during the fourth quarter.
Adjusted EBITDA for the fourth quarter of 2023, with a negative $2 1 million compared with a negative $1 9 million for the fourth quarter of 2022.
To summarize our full year results revenue for 2023 was $19 2 million up 24% compared with 2022, while 2023 product revenue of $17 5 million was up 20%.
Gross margin for 2023% to 68, 5% compared with 65, 9% for 2022.
Gross margin on product sales for $2023 65, 3% compared to 63, 6% for 2022.
Operating expenses for 2023, or $21 4 million, an increase of 2% compared with 2022.
Operating loss for $2023 $8 2 million compared with an operating loss of $10 7 million for 2022.
Net loss for 2023 was $8 1 million or <unk> 28 per share compared with a net loss of $10 7 million or $1 52 per share for 2022.
Adjusted EBITDA was a negative $7 million for 2023, compared with a negative $9 3 million for 2022.
Dave Henry: Turning now to our cash position, cash, cash equivalents, and short-term investments as of December 31, 2023, or 8.9. Cash used in operating activities was $2.4 million for the fourth quarter of 2023, unchanged from the fourth quarter of 2022. For the full year, cash used in operations was $6.2 million compared with $10.2 million.
Turning now to our cash position cash cash equivalents and short term investments as of December 31, 2023% or $8 9 million.
Cash used in operating activities was $2 4 million for the fourth quarter of 2023 unchanged from the fourth quarter of 2022 for the full year cash used in operations was $6 2 million compared with $10 2 million in 2022.
Dave Henry: We completed a registered direct offering in January 2024, generating net proceeds to Myomo of approximately $5,000. As a warm-up for the offering, our cash balance entering 2024 was $14.3 million, which we believe is sufficient to fund our operations for at least the next 12 months. I'll close my comments with a review of our financial guidance. As Paul mentioned, on February 29th, 2024, CMS published the final fees for our two billing codes, L-8701 and L-8702.
We completed a registered direct offering in January 2024, generating net proceeds to <unk> of approximately $5 4 million.
Format for the offering our cash balance entering 2024 was $14 3 million, which we believe is sufficient to fund our operations for at least the next 12 months.
I'll close my comments with a review of our financial guidance.
As Paul mentioned as of February 29, 2020 for CMS published the final piece of our two billing codes 80, 701 and 702.
Dave Henry: We're grateful that we now have clarity on reimbursement effective April 1st. While our backlog is up 87% year-over-year, a good portion of that growth is from Medicare Part D patients. In the near term, Medicare patient revenues will be reported at the time of payment until sufficient collection history is established.
Grateful that we now have clarity on reimbursement effective April one.
While our backlog is up 87% year over year, a good portion of that growth is from Medicare part D patients.
In the near term Medicare patient revenue that we reported at the time the payment until sufficient collection history is established.
Dave Henry: As a result, we estimate first quarter 2024 revenues will be in the range of $4.1 million to $4.3 million, an increase of between 19% and 25% compared with the year-ago quarter, with growth accelerating through the remainder of 2024. We expect some gross margin pressure in the first half of 2024 as we ramp deliveries to Medicare patients, reporting the cost of goods sold at that time while reporting revenue at payment until we build sufficient collection history to enable reporting revenue at delivery. Gross Margin Expansion should resume year-over-year during the second half of 2020.
As a result, we estimate first quarter 2024 revenues will be in the range of $4 1 million to $4 3 million, an increase of between 19% and 25% compared with a year ago quarter with growth accelerating through the remainder of 2024.
We expect some gross margin pressure in the first half of 2024, as we ramp deliveries to Medicare patients reporting cost of goods sold at that time, while reporting revenue at payments until we build a sufficient collection history to enable reporting revenue delivery.
Gross margin expansion should we assume year over year during the second half of 2024.
Dave Henry: We're generally on track, but our plan is to hire at least 50 to 60 new employees by the end of the second quarter of 2024, primarily to increase our clinical reimbursement and manufacturing capacity. Assuming we can increase capacity as planned and assuming there are no unexpected supply chain disruptions, we believe we can achieve full year 2024 revenue of between $28 million and $30 million, an increase of 46% to 56% compared to full year 2023. This implies more than $10 million in quarterly revenue by the fourth quarter of 2024. And at that revenue level, we believe it is achievable to achieve an operating cash flow rate even on a quarterly basis by the fourth quarter of 2024. Cash used for operations is expected to be higher in the first half of 2024 as we increase the cost structure in advance of meaningful Medicare property revenues, and lower in the second half of the year. With that financial overview, I'll return the call to Paul. Thanks, Dave.
We're generally on track with our plans to hire at least 50 to 60, new employees at the end of the second quarter of 2024, primarily to increase our clinical reimbursement and manufacturing capacity.
Assuming we can increase capacity plan and assuming there is no unexpected supply chain disruptions. We believe we can achieve full year 2020 for revenue of between $28 million to $30 billion, an increase of 46% to 56% compared to full year 2023.
This implies more than $10 million quarterly revenue by the fourth quarter of 2024.
That revenue level, we believe it is achievable to be operating cash flow breakeven on a quarterly basis by the fourth quarter of 2024.
Cash used for operations is expected to be higher in the first half of 2024 as we increase the cost structure in advance of meaningful Medicare part D revenues and lower in the second half of the year.
With that financial overview ill turn the call back to Paul.
Thanks, Dave when we start this year in the strongest position in the company's history, our investment in a high quality clinical research resulted in Medicare coverage of our power embraces. This milestone has a number of benefits.
Paul R. Gudonis: Well, we start this year in the strongest position in the company's history. Our investment in high-quality clinical research resulted in Medicare coverage for our powered arm braces, and this milestone has a number of benefits. We believe our addressable market has doubled since we can now serve the 50% of seniors who are covered by standard Part B Medicare. We could not provide a MyoPro to these prospects in the past, and so we placed them in our database in anticipation of CMS reimbursement. Now we can meet their medical needs if there are appropriate candidates. We can now add these candidates to our patient population without increasing the marketing budget. These individuals, their families, and their clinicians are already contacting us, so our cost per pipeline ad should come down over time. The other 50% of seniors in the U.S. who are covered by Medicare Advantage plans could have an easier time obtaining approval from their health insurance plans since these payers are required to cover what Medicare Part B covers, including several large payers that have resisted covering the device in the past.
We believe our addressable market has doubled since we can now serve the 50% of seniors who are covered by standard part B Medicare.
Not provide a minor part of these prospects in the past and so we placed them in our database and anticipations CMS reimbursement now we can meet their medical need if there are appropriate candidates.
We can now add these can store patient population without increasing the marketing budget. These individuals their families and their physicians are already contacting us so our cost per pipeline add should come down over time.
The other 50% of Skus in the U S were covered by Medicare advantage plans.
Easier time of obtaining approval from their health insurance plans.
These payers are required to cover what Medicare part D coverage, including several large payers that have resisted covering the device in the past.
Paul R. Gudonis: Some of the Medicare Advantage plans have publicly stated that they are seeing increased medical costs post-COVID as patients seek treatments they may have postponed, and we've seen a short-term impact on authorizations received in the last few months from these payers and what may be an attempt to manage utilization. However, with the published fee in place, we intend to start evaluating patients with any Medicare Advantage plan and submitting claims in 2024, since all Medicare Advantage plans are now required to cover MyoPro, so long as medical necessity can be established and the patient otherwise meets our inclusion criteria. It also means for younger individuals with arm paralysis who are enrolled in commercial plans such as Blue Cross Blue Shield, Aetna, Cigna, UnitedHealthcare, we expect to see these plans follow Medicare's guidelines over time and improve coverage of the myoco for their beneficiaries as well.
Some of the Medicare advantage plans have publicly stated that they are seeing increased medical costs post COVID-19 as patients seek treatments. They may have postponed and we've seen a short term impact that authorization is received in the last few months from these payers what may be an attempt to manage utilization.
However, with the published in place, we intend to start evaluating patients with any Medicare advantage plan and submitting claims in 2024 since all Medicare advantage plans are now required to cover the micro so long as the medical necessity can be established and the patient otherwise meets our inclusion criteria.
We'll also reach with younger individuals with arent paralysis, who enrolled with commercial plans such as Blue Cross Blue Shield, Aetna Cigna, United Healthcare, we expect to see these plans follow Medicare guidelines overtime and approved coverage at <unk> for their beneficiaries as well.
Paul R. Gudonis: And finally, because of this Medicare Part B coverage now in place, we are seeing new interest among orthotics and prosthetics clinics around the country in supplying myoprotein to their patients. With a much clearer reimbursement path, this O&P channel could develop into a significant source of product sales in the future. So we intend to increase our emphasis on this channel in 2024. In fact, several of our senior leadership team are meeting with O&P executives and owners at this week's annual Academy of O&P conference in Chicago to begin discussing how they can become a MyoPro Center of Excellence. I just returned from a trip to Germany to meet with our colleagues there.
And finally because of this Medicare part D coverage now in place we are seeing new interest among orthotics and prosthetics clinics around the country and supplying the bio protein in their patients with a much clearer reimbursement path. This one P channel could develop into a significant source of product sales in the future.
So we intend to increase our emphasis on this channel in 2024 and in fact several of our senior leadership team are meeting with all the executives and owners at this week's annual Academy is one P conference in Chicago to begin discussing how they can become a <unk> center of excellence.
I just returned from a trip to Germany.
So there we have a growing profitable business in Germany, and we should see continued growth in international revenues as more clinics become trained on how to provision the bio parole and a larger number of the German statutory health insurers cover the device for their beneficiaries.
Operator: We have a growing profitable business in Germany, and we should see continuing growth in international revenues as more OMP clinics become trained on how to use the MyoPro and a larger number of German statutory health insurers come to the device for their beneficiaries. And the China JV, in which our company has a 19.9% equity interest, could start production and sales this year upon approval by its national regulatory agency. With this clarity from CMS to serve seniors with Part B coverage, we are now ramping up our capacity to meet anticipated demand. As Dave stated, we started the year with 104 employees, and we are planning to hire 50 to 60 more to double our clinical reimbursement manufacturing capacity by the second half of the year.
And the China, JV, which our company has a 19, 9% equity interest could start production in sales this year upon approval by their national regulatory agency.
With this clarity from CMS to serve seniors with part D coverage, we're now ramping up our capacity to meet anticipated demand.
As Bill stated we started the year is 104 employees and we are planning to hire 50 to 60 more than double our clinical reimbursement manufacturing capacity by the second half of the year.
Operator: With this larger market opportunity in front of us and the new capital we've raised, we'll also be increasing our spending on research and development and product support as our volumes grow so that we continue to innovate, add to our IP portfolio, and build on our market-leading position since a published view often extracts competition into a product category. With CMS coverage now in place, we have the opportunity to make MyoPro the standard of care for individuals suffering from long-term upper extremity impairment due to stroke, brachial plexus injury, or other neurological conditions. So with that overview of 2023 and a look into our plans for 2024, we're now ready to take your questions. Operator? We will now begin the question and answer session. To ask a question, you may press star then 1 on your touchtone phone.
With this larger market opportunity in front of us and the new capital. We raised we will also be increasing our spending on research and development and product support as our volumes grow so that we can.
Continue to innovate add to our IP portfolio and build on our market leading position since the published we often extracts competition into product category.
With CMS coverage now in place we have the opportunity to make the <unk>. The standard of care for individuals suffering from long term upper extremity impairment due to stroke brachial plexus injury or other neurological condition.
So with that overview of 2023 and are looking to our plans for 2024, we're now ready to take your questions operator.
We will now begin the question and answer session to ask a question you May Press Star then one on your Touchtone phone if youre using a speakerphone. Please pick up your handset before pressing the keys.
Operator: If you are using a speakerphone, please pick up your handset before pressing the. If at any time your question has been addressed and you would like to withdraw your question, please press star then 2. Before we take the first question, I want to mention that we are available for a virtual and in-person investor meeting, so please contact LHA Investor Relations to set up a time to meet with us. Operator, whenever you're ready, we are ready for the first question. Thank you. The first question comes from Anthony Vendetti from Maxim Group. Please go ahead.
At any time. Your question has been addressed and you would like to withdraw your question. Please press Star then two.
The first question for Tom.
Before we take the first question I want to mention that we are available for virtual and in person Investor meeting. So please contact <unk> investor relations to set up a time to meet with us.
Operator whenever you are ready we are ready for the first question.
The first question comes from Anthony Vendetti from Maxim Group. Please go ahead.
Anthony V. Vendetti: Yeah, thank you. I wanted to focus on increasing capacity and manufacturing capacity to get to 28 to 30 million. Obviously, this is great news with the reimbursement coming in, you know, at the levels that it came in at, and the backlog and pipeline growing. So, Paul, I think you said you're planning to double capacity. How are you going about that? And what limiting factors or roadblocks do you see to getting that done in time to meet this guidance for 2024? Well, thanks, Anthony.
Yes. Thank you I wanted to focus on the.
Increasing capacity your manufacturing capacity to get to the 28 to 30 million. Obviously this is <unk>.
Great news with the reimbursement coming in.
At the levels that it came in at.
And in the backlog and pipeline growing so.
Paul I think you said you're planning to double capacity.
How are you going about that.
And what.
Limiting factors of roadblocks DC to getting that done in time to meet to meet this disc.
This guidance for 2024.
Paul R. Gudonis: Last year, I hired a very experienced manufacturing executive in Collin Anderson, and he's been expanding our team here at our Boston facility. So, we've been adding more workstations, training more manufacturing assembly folks, and quality folks. We just had a meeting with Cogmedix, one of our suppliers, this week. So, we're getting prepared to double our output between now and the second half of the year. And then, going forward, we're going to be looking at expanded facilities, as well, to continue to expand because, again, we've got such a large market of opportunity for us. And then, and then just, you know, the ramp that is going to be in the second half. That's, that's mostly what it is.
Well, Thanks, Anthony last year, I hired a very experienced manufacturing executive and Carl Anderson.
He has been expanding our key during our Boston facility. So we've been adding more workstations training more manufacturing assembly folks quality folks. We just had a meeting with cosmetics one of our suppliers. This week. So we're getting prepared to double our output between now and the second half of the year and then going forward.
We are going to be looking at the expanded facilities as well to continue to expand because again, we've got such a large market opportunity in front of us now.
And then and then just you know.
The ramp that is going to be in the second half.
That's that's mostly.
Paul R. Gudonis: That ramp is mostly to serve Medicare Part B patients. I mean, obviously, you'll be serving other commercial patients as well. But the ramp that you're talking about is going to be driven largely by Medicare Part B, correct? Yeah, that additional volume will be coming from these Medicare Part B patients because we've essentially doubled our addressable market, Anthony, so we'll continue to see growth in our Medicare Advantage commercial plans, our international team will continue to grow, and on top of that, add the Medicare Part B patients who we can now serve. And lastly, the 50 to 60 new employees, approximately how many of those will be on the reimbursement side? It's a smaller number, a few people, what we call patient navigators, to work with patients, members of our clinical reimbursement team to collect medical documents, but their growth will mostly be in our call center, our customer experience operation, intake coordinators, more CPOs, certified process authorities in the field who evaluate and then deliver the product to patients, the manufacturing inspection team, and then our follow-on mild care coaches and clinical specialists to follow up with patients. And you look at 50 to 60 percent growth in headcount, yet we're going to be doubling capacity and revenue volume. So that's where we're getting some really good efficiencies because we've already built the infrastructure.
That ramp is mostly to serve the Medicare part B I mean, obviously, you'll be serving the other.
Commercial patients as well, but.
The the ramp that you're talking about is going to be driven largely by Medicare part B correct.
Yes.
Additional volume will be coming from these Medicare part D patients because we've essentially doubled our addressable market. Anthony So we will continue to see growth in our Medicare advantage commercial plans our international team will continue to grow and on top of that as a Medicare part D patients, who we can now serve.
And lastly, the 50 to 60, new employees approximately how many of those will be on the reimbursement side.
It's a smaller number of few people, what we call patient navigators to work with patients members of our clinical reimbursement team to collect medical blackness, but where most of the growth will be in our call center customer experience operations and take coordinators more.
<unk> certified processing thoughts are just in the field to evaluate and then deliver the product to patients.
It's actually inspection team and then our follow on bio care coaches and clinical specialist to follow up with patients.
The majority will be folks that are.
Fueled operations in line manufacturing operations, and you look at 50% to 60% growth in head count yet, we're going to be doubling capacity and revenue volume. So there is that's where we gave some really good efficiencies because we've already built the infrastructure for the company. So most of the head count adds it's drip.
Paul R. Gudonis: So most of the headcount additions are driven by increasing clinical, manufacturing, and reimbursement capacity. You know, everything else is like the overhead and things like that, it's such as, make sure that's the first priority as we add. Okay, great. Thanks so much. I'll hop back in the queue.
By increasing clinical manufacturing and reimbursement capacity so it's.
Everything else is like the overhead and things like that it's secondary.
Make sure Thats the first priority.
Adding head count.
Okay, great. Thanks, so much I'll hop back in the queue I appreciate it.
Anthony V. Vendetti: I appreciate it. The next question comes from Edward Woo from Ascendian Capital. Please go ahead.
The next question comes from Edward Woo from Sandy and capital. Please go ahead.
Edward Woo: Yeah, congratulations on the quarter. My question is, was I correct that you said that European international revenue was 23%? Is that a very high amount? Do you anticipate international revenue being that high or more going forward? I think 23% was correct.
Yes, congratulations on the quarter. My question is was that correct that you said that the European International revenue was 23% is that that seemed like a very high amount do you anticipate international being that high or more going forward.
Thank you.
23% was correct that the percentage of revenue in the fourth quarter and as Paul Just mentioned I think we're looking at growth.
Dave Henry: That was the percentage of revenue in the fourth quarter. And as Paul just mentioned, I think we're looking at growth in international revenues continuing into 2024. Great. Is it mainly in the German market, where you guys have had a lot of growth previously, or have you guys considered expanding to the rest of Europe? This is primarily in Germany, Edward, and we've built up a really good business development and clinical team now. We've recruited 100 orthotics and prosthetics clinic locations. I met with some of them last week.
International revenues continuing into 2024.
Great is it mainly in the German market, where you know you guys have had a lot of your growth previously or have you guys consider expanding to the rest of Europe.
This is primarily Germany, Edward we built up a really good business developed a clinical team now.
We've recruited 100 or clients and prospects are clinic locations I met with some of them last week.
Paul R. Gudonis: And we're getting good reimbursement progress there in Germany. So we said, look, let's double down in Germany because it's a large market, over 80 million population, so big prevalence and new strokes, so that's our best market right now. And we may look at other international market expansion later on. But we go where the reimbursement is, and the reimbursement is in Germany.
Again, good reimbursement progress there in Germany. So we said look let's double down the journey, because it's a large market over $80 million population. So large prevalence in new stroke. So that's your best market right now and we May look at other international market expansion later on but we go where the reimbursement is reimbursement is in Germany right now.
Edward Woo: Great. Well, thank you and congratulations. Thanks, everybody.
Great well, thank you and congratulations.
Thanks, Ed.
Operator: As a reminder, if you have a question, please press star 1. The next question comes from Ben Haynor from Alliance Global Partners. Please go ahead.
As a reminder, if you have a question. Please press star one. The next question comes from Ben Hayner from Alliance Global Partners. Please go ahead.
Ben Haynor: Good afternoon, gentlemen. Thanks for taking the questions. First off, for me, you mentioned the O&P clinics becoming more excited with the Medicare reimbursement amount being announced and coverage being in place for Part B. Can you talk a little bit about how those folks look at the product and maybe a little bit more color on the sorts of people you're meeting with at the upcoming conference here, Paul, for the O&P folks? Well, the O&P channel is very well positioned to provide the MyoProbe to patients. You know, what's been a barrier to adoption has been the reimbursement process, and that's why we integrated it forward with our own direct billing clinical team in the field. But O&P clinics, there are approximately 3,000 locations in cities all across the country.
Hey, good afternoon, gentlemen, thanks for taking the questions.
First off for me you mentioned, the one P clinics, becoming more excited with the Medicare reimbursement amount being announced and coverage being in place for part B can you talk a little bit about how those folks look at.
The product.
Maybe a little bit more color on the sorts of.
People Youre meeting where at the upcoming conferences <unk> Paul for the old people.
Well the one P channel is very well positioned to provide the my approach to patients whats been a barrier to adoption has been the reimbursement process and that's why we are integrating it forward with our own direct billing our clinical teams in the field.
But all of the clinics.
Approximately 3000 locations.
Ben Haynor: They see a lot of stroke patients already for what are called ankle photarthroses, ASOs, so patients are already coming into their clinical facilities requiring an orthosis for, for example, foot drop, and many of these patients will also have upper extremity weakness. So we think it's very natural for these O&P clinicians to look at these patient candidates walking in and say, look, you might be a candidate for MyoProbe. Let's get a prescription from your doctor if you're a medically appropriate candidate.
Our cities all across the country, they see a lot of stroke patients already.
Or what are called ankle foot orthosis ASO.
Actions are already coming into their clinical facilities are requiring.
And orthosis for for example foot drop in many of these patients will also have upper extremity weakness. So we think it's very natural for these old C. Clinicians to look at these patient candidates walking and saying look you might be candidates for mindful, let's get a prescription from your Doctor. If you are medically appropriate candidate.
Paul R. Gudonis: So that's why we think it's a good opportunity for them. They're certainly interested in growth, and this is the largest growth opportunity in the field of orthotics and prosthetics, and there are a number of meetings going on this week in Chicago at that conference with a number of companies from the largest to, you know, some of the individual clinics that, you know, have known the MyoProbe, they know our team for a number of years, and now they've seen the green light that they can go Okay, that's definitely helpful. And then on, you mentioned the MyoPro Centers of Excellence or MyoPro becoming a MyoPro Center of Excellence for these O&P clinics. What does that entail? Does that exist now?
So that's why we think it's a good opportunity for them, they're certainly interested in growth and this is the largest growth opportunity.
The field of Orthotics and prosthetics.
So there are a number of meetings going on this week in Chicago at their conference with <unk>.
A number of properties from the largest to some of the individual clinics.
Those are my approval they know Archie for number of years and now they've seen the green light.
Can go out and serve these patients.
Okay. That's definitely helpful and then on that.
Mentioned, the micra micro centers of excellence.
Becoming an <unk> center of excellence.
Are these LNP clinic, what does that entail does that does that exist now.
Paul R. Gudonis: Help me out with that a little bit more. Yeah, we have such a program. You have to go through a certain amount of clinical training by our staff; we will assist you with the evaluation and fitting of initial patients, and once you pass that certification, then you are what we call a center of excellence, and then you can start to fit patients, and we may even refer patients to you depending on, you know, different geographies. Okay, that's helpful. And then do you need to hire folks to do that trade?
Help me out with that a little bit more.
Yeah, we have such a program.
You have to go through a certain amount of clinical training.
Staff.
To assist you.
With the evaluation and sitting up initial patients and once you pass the certification.
Then what.
What we call center of Excellence and then you can start with sick patients and we may even refer patients to need depending on depth.
Geographies.
Okay.
That's helpful. And then do you need to hire folks to do that training is that part of the 50 to 60 people you're hiring.
Paul R. Gudonis: Is that part of the 50-60 people you're hiring? Yes, it includes some O&P channel managers, as well as expanding our clinical training staff to be able to train these additional channel partners. Okay.
Yes. It includes some OTT channel managers.
As well as expanding our clinical training staff to be able to train these additional channel partners.
Okay got it and then just on the guidance for Q1 and the remainder of the year.
Ben Haynor: And then, just on the guidance for Q1 and the remainder of the year, I mean, is that it? Step up, you know, kind of a function of waiting to ship some of these things out to Medicare patients until reimbursement is set, so, you know, instead of shipping the last week of March, you know, moving in, you know, maybe shipping the first week of April. What's the right way to think about that? That's the right way to think about it. Okay, okay, fair enough. Okay, it makes complete sense.
Is that the.
No.
Step up.
Or a function of waiting on shifting some of these things out the Medicare patients and tell the reimbursement Lasalle.
Set up shipping the last week of March.
Moving and maybe shifting the first week of April what's the right way to think about that.
That's the right way to think about.
Okay, Okay fair enough.
Yes.
Okay. It makes complete sense.
Ben Haynor: And then, um... And lastly for me on the guidance, you mentioned Q4 potentially getting to cash flow break even. Where do you, and you also mentioned the step up in gross margin in the second half. Where should we be looking at? Ending the year in terms of gross margin. I mean, does that get into the 70s?
And then.
Lastly for me on the guidance you mentioned.
Q4 potentially getting to.
Cash flow breakeven, where do you and you also mentioned the step up in gross margin in the second half were where should we be looking at.
In the year in terms of gross margin.
I mean does that get at 70.
I think I.
Dave Henry: I think it's, I do think with volume increases and, I think it's probably an opportunity to increase our ASP a little bit now that we have the Medicare fees in place. I think it's possible, certainly, to be more than $7,000, and Mark. Thank you. OK. I got it. I think that's all I have, gentlemen. Thanks for taking the questions and congratulations on all the progress and getting the reimbursement in place. Thank you, guys. Again, if you have a question, please press star then 1.
I do think with.
Volume increases.
Yeah.
Probably an opportunity to increase our ASP a little bit now that we have the.
The Medicare piece in place I think it's I.
I think it's possible certainly to be more than 70%.
In the fourth quarter.
Okay.
Got it I think that's all I had gentlemen, thanks for taking the questions and congrats on all the progress getting the reimbursement in place.
Thank you Pat.
Again, if you have a question. Please press Star then one.
Paul R. Gudonis: Seeing that there are no further questions, I would like to turn the call back over to Paul Gudonis for closing remarks. Thanks, Operator. Well, I want to thank the new investors that had faith in us and our products and participated in our capital raises over the past 15 months. We've been able to attract well-regarded fundamental healthcare investors who see the long-term potential of this business, and we've had a number of executives and board members increase their stock holdings as well. We're now focused on scaling the business with operational efficiencies so that we can meet this increased demand and achieve our goals of cash flow break-even by the end of the year under the various assumptions that Dave pointed out. We're delighted to put this major reimbursement issue behind us, and 2024 will be a transformational year for Myomo. We're thrilled to be in a position both to grow the company significantly and to improve the quality of life for a larger number of patients. Thanks for your continued interest in our company, and have a good day. The conference is now concluded. Thank you for attending today's presentation. You may now disconnect.
Seeing that there are no further questions I would like to turn the call back over to Paul <unk> for closing remarks.
Oh, Thanks, operator, well I want to thank the new investors they had faith in us and our tropics and participate in our capital raises over the past 15 months, we've been able to attract well regarded fundamental health care investors, who see the long term potential of this business and we've had a number of executives and board members increase their stock holdings as well where now folk.
Just on scaling the business with operational efficiencies that we can meet this increased demand.
Our goals of cash flow breakeven by the end of the year under the various assumptions that Dave pointed out we are delighted to put this major reimbursement issue behind us in 2024 will be a transformational year for Michael Hall with drove be in a position both the global companies significantly and to improve the quality of life for a larger number of patients. Thanks.
For your continued interest in our company and have a good day.
The conference has now concluded. Thank you for attending today's presentation you may now disconnect.