Q2 2024 Myomo Inc Earnings Call
Operator: Good day, and welcome to Myomo's second quarter 2024 earnings call. All participants will be in a listen-only mode, and should you need any assistance, please signal a conference specialist by pressing the star key followed by, After today's presentation, there will be an opportunity to ask questions. If you would like to ask a question, you may press star, then 1 on your telephone keypad. And to withdraw yourself from the queue, please press star, then 2. Also, please be aware that today's call is being recorded. I would now like to turn the call over to Kim Golodetz with LHA. Please go ahead.
Good day and welcome to my almost a second quarter of 2024 earnings call.
Speaker Change: All participants will be in a listen only mode and should you need any assistance. Please signal a conference specialist by pressing the Starkey followed by zero.
Speaker Change: After todays presentation, there will be an opportunity to ask questions.
Speaker Change: I would like to ask a question you May Press Star then one on your telephone keypad to withdraw yourself from the queue. Please press Star then two.
Speaker Change: Also please be aware that today's call is being recorded.
Speaker Change: I would now like to turn the call over to Kim Golar, that's with Elly Chen. Please go ahead.
Kim Golodetz: Thank you, operator, and good afternoon everyone. This is Kim Golodetz with LHA.
Tim Golar: Thank you operator and good afternoon, everyone. This is Tim go without that's L. A right welcome to the Myanmar second quarter 'twenty 'twenty four conference call.
Kim Golodetz: Welcome to the Myomo second quarter 2024 conference call. Earlier this afternoon, Myomo issued a news release announcing financial results for the three-and-six months ended June 30, 2024. If you would like to be added to the company's email distribution list to receive future announcements, please register on the company's website at myomo.com or call LHA at 212-838-3777 and speak with Carolyn Cur
Speaker Change: Earlier this afternoon, Miami issued a news release announcing financial results for the three and six months ended June 30th 'twenty 'twenty four.
Speaker Change: We'd like to be added to the company's email distribution list to receive future announcements. Please register on the company's website at my own mind Dot com or 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 statements. 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. Such 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.
Speaker Change: With me on today's call from Miami, All Paul go down as Chief Executive Officer, and Dave Hendry, Chief Financial Officer.
Kim Golodetz: These and additional risks, uncertainties, and other factors are discussed in Myomo's filings with the Securities and Exchange Commission, including on Forms 10-K and 10-Q. However, 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.
Speaker Change: 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. The words anticipate believe estimate expect intend guidance outlook confident target.
Speaker Change: Jack and other similar expressions are typically used to identify such forward looking statements.
Speaker Change: 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 my business financial condition and operating results.
These and additional risks uncertainties and other factors are discussed in Miami filings with the Securities and Exchange Commission, including forms 10-K and 10-Q.
Speaker Change: Actual outcomes and results may differ materially from what is expressed in or implied by these forward looking statements.
Speaker Change: Except as required by law Miami undertakes no obligation to revise or update any forward looking statements to reflect events or circumstances. After the date of this call.
Paul Godown: It is now my pleasure to turn the call over to my almost CEO Paul go down there Paul. Please go ahead.
Paul Gudonis: Thanks, Kim. Good afternoon, everyone. Thank you for joining us today. We are delighted to report excellent financial results for the second quarter of 2024, which was the first quarter since the Medicare fees for the MyoPro powered arm braces went into effect beginning April 1st. As a result of our ability to add patients covered by standard Medicare Part B to our target market, we achieved quarterly records in revenues, additions to, and the total number of patients in the patient pipeline, authorizations, and MyoPro orders and shipments.
Paul Godown: Thanks, Kim and good afternoon, everyone and thank you for joining us today.
Paul Godown: We are delighted to report excellent financial results for the second quarter of 2024, which was the first quarter since the Medicare fees for the micro powered embraces went into effect beginning April 1st.
Paul Godown: As a result of our ability to add patients covered by standard Medicare part D to our target market, we achieved quarterly records in revenues additions to in the total number of patients and the patient pipeline authorizations and Micropro orders and shipments.
Paul Gudonis: As you know, the MyoPro is being reclassified by CMS into the Brace Benefit category as of January 1st, 2024, which will result in lump-sum payments for these custom devices for patients with paralyzed arms. However, during the first quarter, Medicare paid claims for patients who met the agreed-upon criteria for medical necessity, however, the reimbursement amount was below the proposed allowable rate. The MyoPro is delivered to patients after April 1st. The approved fees were $65,872 for the MyoPro Motion G and $33,481 for the Motion W model. And just to note, the Motion G represents over 90% of our unit volume because it enables the function of both the arm and the hand.
Paul Godown: No the bioprocess reclassified by CMS into the brace benefit category as of January one 2024, which resulted in lump sum payments for these custom devices for patients with paralyzed arms.
Paul Godown: First quarter Medicare paid claims for patients who met the agreed upon criteria for medical necessity or the reimbursement amount was below the proposed allowable rate.
Speaker Change: The microprose delivered to patients after April 1st the approved fees were $65872 for the Micropro motion G at $33481 for the motion Bellevue model and just to note. The motion Jeep represents over 90% of our unit volume because it enables function of both the <unk>.
Paul Godown: Arm and the hand.
Paul Gudonis: We were able to recognize revenue on 74 MyoPros delivered to Medicare Part D beneficiaries during the second quarter, a population that we previously had to turn away. Shipments to these patients were in addition to the shipments to Medicare Advantage, VA, orthotics and prosthetics clinics, and international customers, all of which contributed to a growth in product revenues of 77% over the second quarter of 2023. Now, when Medicare Part B patients contact us directly or are referred by a physician or therapist, our direct billing provider team can engage with them.
Paul Godown: We were able to recognize revenue on 74 microprose delivered to Medicare part D beneficiaries during the second quarter, a population that we previously had to turn away.
Paul Godown: For these patients who are in addition to the shipments to Medicare advantage, VA, orthotics, and prosthetics clinics and international customers.
Paul Godown: Which contribute to growth in product revenues of 77% over the second quarter of 2023.
Paul Godown: Our Medicare part D patients contact us directly or referred by a physician or a therapist or direct billing provider team can engage with them.
Paul Gudonis: This led to a record number of 550 additions to our patient pipeline in the quarter and 1,179 patients in the overall pipeline. As a reminder, the patients in the pipeline are those who have begun the reimbursement process. Our marketing spend is now far more efficient as we're able to expand this pipeline at a cost per candidate that was 26% lower than a year ago.
Paul Godown: This led to a record number of 550 additions to our patient pipeline in the quarter.
Paul Godown: 179 patients in the overall pipeline.
Paul Godown: As a reminder, patients in the pipeline are those who are in the process had begun the reimbursement process.
Paul Godown: Our marketing spend is now more far more efficient as we're able to expand its pipeline at a cost per candidate that was 26% lower than a year ago.
Paul Gudonis: During Q2, we received 213 insurance approvals, Part B medical documents, and orders from the VA system and O&P clinics, which is up 70% year over year. We received evidence of payments for the Medicare Part D claims much faster than we had anticipated, which, as Dave will explain, led to revenues coming in higher than our guidance. We've also seen our average selling price, or ASP, trend upward to more than $47,000 in the second quarter with these payments under our direct billing operation, which are typically paid at 80% of the Medicare allowable amounts, plus any co-pays by secondary insurance or out-of-pocket payments by patients. As for the Medicare Advantage plans, they are required to cover what standard Medicare covers, and we've seen mixed results from these payers so far. Dave will elaborate further in his remarks.
Paul Godown: During Q2, we received 213 insurance approvals part B medical documents in orders from the VA system, an old pit clinics, which is up 70% year over year.
Paul Godown: We received evidence of payments for the Medicare part D claims much faster than we had anticipated, which as Dave will explain led to revenues coming in at the higher than our guidance.
Dave Hendry: We've also seen our average selling price or ASP.
Dave Hendry: Trend upwards of more than $47000 in the second quarter with these payments under our direct billing operation, which are typically paid at 80% of the Medicare allowable amount plus any co pays by secondary insurance for out of pocket payments by patients.
Dave Hendry: As for the Medicare advantage plans they are required to cover what standard Medicare covers and we've seen mixed results from these payers so far.
Dave Hendry: I will elaborate further in his remarks.
Paul Gudonis: We need to obtain a pre-authorization for MyoPro for patients covered by these plans. In some cases, the approval percentage has gone down as these plans try to control their utilization costs post-COVID, which is, of course, contrary to Medicare regulations. Our chief medical officer works with patients to appeal certain cases at an administrative law judge hearing, but we've recently seen a positive trend with judges overturning denials by declaring that the MyoPro is not experimental or investigational, or that it is not medically necessary since Medicare is covering the device. These are wins for patients with these Medicare Advantage plans. I hope these decisions set a precedent with these payers and others.
Speaker Change: We need to obtain a preauthorization for myopia all for patients covered by these plans in some cases the approved approval percentage has gone down as these clients try to control the utilization costs post Covid, which of course is contrary Medicare regulations.
Speaker Change: Our Chief Medical Officer works with patients to appeal certain cases at the administrative law judge hearing.
Speaker Change: Recently seen a positive trend with judges overturning denials by declaring that the <unk> is not experimental or investigational or that it is not medically necessary since Medicare is covering the device.
Speaker Change: These are wins for the patients with these Medicare advantage plans I hope these decision set a precedent with these payers and others.
Paul Gudonis: And more good news is that we've seen some of these Medicare Advantage plans start to remit payments to us at the Medicare rate, which is contributing to the higher ASP. To meet the growing demand from an expanded adjustable market, we've been adding capacity across the revenue cycle. We've added intake coordinators to answer inquiries. We've increased our reimbursement staff and licensed clinicians in the field. And we've added employees in our manufacturing quality and fulfillment operations.
Speaker Change: And more good news is that we've seen some of these Medicare advantage plans start to remit payments to us at the Medicare rate, which is contributing to the higher asp's.
Speaker Change: To meet the growing demand from an expanded addressable market, we've been adding capacity across the revenue cycle. We've added intake coordinators answered inquiries, we've increased our reimbursement staff and license questions in the field, we've added employees in our manufacturing quality and fulfillment operations or staff has increased more.
Paul Gudonis: Our staff has increased from approximately 100 employees at the beginning of the year to about 160 currently. We're also finalizing plans to move to a larger production facility in the Boston area later this year to accommodate additional expected growth in shipments this year and in the future. Our international operations, primarily in Germany, continue to do well, generating over a million dollars of revenue in the quarter.
Speaker Change: We are 100 employees at the beginning of the year, it's about 160 correctly.
Speaker Change: Also finalizing plans to move to a larger production facility in the Boston area. Later this year to accommodate additional expected growth in shipments this year and in the future.
Speaker Change: Our international operations, primarily in Germany continues to do well generating over $1 million of revenue in the quarter. We also expanded the clinical and business development teams to support the expected growth in this market.
Paul Gudonis: We also expanded the clinical and business development teams to support the expected growth in this market. And with the clarity on Medicare Part B reimbursement, we've seen keen interest from domestic O&P clinics since this is a patient population they already serve with ankle foot orthoses and other braces. We recruited an experienced orthopaedic channel team of business development managers and clinical trainers, and we established a certification program for orthopaedic clinics to become a MyoPro Center of Excellence.
Speaker Change: And with the clarity on the Medicare part D reimbursement, we've seen keen interest from domestic one P clinics.
Speaker Change: Patient population they already served with ankle foot orthosis other braces.
Speaker Change: Prudent experienced one P channel team of business development managers and clinical trainers and we established a certification program for one be clinics become a milepost center of excellence.
Paul Gudonis: We started training some of these skilled professionals, and they plan to evaluate patient candidates in the near future. After receiving the necessary medical documentation to support reimbursement for their patients, we expect that they'll be placing their initial MyoPro orders later this year. Next month is the National Assembly for the American Orthotics and Prosthetics Association, which is the premier annual conference for the O&P industry. We've already planned a manufacturer's workshop and will participate on a research panel to introduce the MyoPro to a larger audience of O&P clinicians.
Speaker Change: Started training some of these skilled professionals they plan to evaluate patient candidates in the near future.
Speaker Change: After receiving the necessary medical documentation to support reimbursement for their patients we expect that there'll be placing their initial micropro orders later this year.
Speaker Change: Next month is the National Assembly for the American Orthotics, and Prosthetics Association, which is the Premier annual conference for the OSB industry borrowed.
Speaker Change: I've already planned to manufacturers workshop will participate under research panel introduced the my approach to a larger audience of one P. Clinicians. Our plan is to build this distribution channel over the coming months in order to add to the business produced by our own dreadfully operation in 2025.
Paul Gudonis: Our plan is to build this distribution channel over the coming months in order to add to the business produced by our own drug billing operation in 2025. And with that overview, I'll turn the call over to our CFO Dave Henry for a deeper dive into the quarterly financials, and I'll return with some additional comments on our business plans.
Speaker Change: With that overview I'll turn the call over to our CFO, Dave Henry for deeper dive into the quarterly financials and I'll return with some additional comments on our business plans Dave.
Dave Henry: Thank you, Paul, and good afternoon, everyone. Let me start my remarks with a review of our second quarter financial results. Revenue for the second quarter of 2024 was $7.5 million. This consisted entirely of product revenue and was up 77% over the prior year's product revenue. Total revenue was up 26% over last year's second quarter, which included a license payment from our joint venture partner in China. Product revenue growth was driven by a higher number of revenue units, which were up 63% year-over-year, and by a higher average selling price, as Medicare and certain Medicare Advantage payers reimbursed for MyoPro in line with the fees published by CMS that became effective as of April 1, 2024.
Dave Henry: Thank you Paul and good afternoon, everyone.
Dave Henry: Let me start my remarks, with a review of our second quarter financial results.
Dave Henry: Revenue for the second quarter of 2024 was $7 $5 million. This consists of entirely product revenue and was up 77% over the prior year quarters product revenue.
Speaker Change: Total revenue was up 26% over last year's second quarter, which included a license payment from our joint venture partner in China.
Dave Henry: Product revenue growth was driven by a higher number of revenue units, which were up 63% year over year and by a higher average selling price as Medicare and certain Medicare advantage payers reimburse for the mile per hour in line with these published by CMS that became effective as a vehicle for 2024.
Dave Henry: Revenue came in higher than our initial guidance due to a higher-than-expected velocity of Medicare payments and hence revenue. 47% of revenue in the second quarter came from Medicare Part B patients. As a result, ASP was approximately $47,500, 9% year-over-year. Revenue from patients with Medicare Advantage plans represented 26% of second quarter revenue, which was down 26% year over year. This decrease came in part from a more challenging reimbursement environment. It appears that utilization management initiatives are underway at key Medicare Advantage payers, and a higher proportion of initial claims are being denied than we'd seen in prior quarters.
Dave Henry: When you came in higher than our initial guidance due to a higher than expected velocity of Medicare payments and hence revenue.
Dave Henry: 40% 47 for 747% of revenue in the second quarter came from Medicare part D patients.
Dave Henry: As a result, a S. P was approximately $47500 up 9% year over year.
Dave Henry: Revenue from patients with Medicare advantage plans represented 26% of second quarter revenue, which was down 26% year over year.
Dave Henry: Decrease came in part from a more challenging reimbursement environment.
Speaker Change: Peers that utilization management initiatives are underway at key Medicare advantage pairs and a higher proportion of initial claims are being denied and we'd seen in prior quarters.
Dave Henry: Of the 158 revenue units in the second quarter, approximately 20% resulted from fill, which is our term for authorizations and orders received and converted to revenue in the same quarter. Driven by revenue from Medicare Part B patients, 78% of our revenue in the second quarter came from the direct billing channel, which is similar to the prior year quarter. The net loss for the second quarter of 2024 was $1.1 million, or $0.03 per share.
Speaker Change: Of the 158 revenue units in the second quarter, approximately 20% resulted from Phil which is our term from off for authorizations in orders received and converted to revenue in the same quarter.
Speaker Change: Driven by revenue from Medicare part D patients, 78% of our revenue in the second quarter came from the direct billing channel, which is similar to the prior year quarter.
Speaker Change: 14% of second quarter revenue came from international markets, primarily Germany.
Speaker Change: Given our success in being paid by CMS for Medicare part D claims effective as of July one 2024, we are recording revenue upon product delivery and the filing of claims with CMS.
Speaker Change: In the second quarter of 2020 for both pipeline additions in total pipeline reached New records.
Speaker Change: The pipeline was 1179 patients at the end of the second quarter, an increase of 22% year over year.
Speaker Change: There were 550 additions to the pipeline in the second quarter, an increase of 35% year over year.
Speaker Change: 19% of the pipeline at the end of the second quarter was Medicare part D patients.
Speaker Change: Of the pipeline additions in the second quarter, 167, or Medicare part D patients.
Speaker Change: Reported backlog represents insurance authorizations in orders received but not yet converted to revenue and in the case of Medicare part D patients those patients for whom we've collected medical records and didn't qualify for delivery based on our inclusion criteria.
Speaker Change: Our backlog at the end of the second quarter of 2024 was a record 282 patients up 58% from our backlog at the end of second quarter 2023.
Speaker Change: And then second quarter backlog includes 96, Medicare part D patients that are either that have either been qualified for delivery with appropriate Medicare documentation.
Speaker Change: I've received a mile pro and claims have been filed but payment has not yet been received.
Speaker Change: The Medicare portion of the backlog increased 16% sequentially.
Speaker Change: And two are contributing to our record backlog was a record 213 authorizations and orders an increase of 70% year over year.
Speaker Change: Gross margin for the second quarter of 2024 coming entirely from product sales was 78% compared with 71, 8% for the prior year quarter.
Speaker Change: The decrease was driven primarily by the impact of 100% margin license revenue in the prior year offset by a higher a S. P. I mentioned earlier.
Speaker Change: Excluding the license revenue gross margin on product sales was 65% in the second quarter of 2023.
Speaker Change: Operating expenses for the second quarter of 2024 were $6 4 million.
Speaker Change: An increase of 20% compared with the second quarter of 2023.
Speaker Change: This increase was driven primarily by higher head count as we added clinical and reimbursement capacity in order to grow revenue in the second half of the year and beyond and higher engineering head count to accelerate completion of certain sustaining engineering projects and new product development.
Speaker Change: Offset by lower stock based compensation expense.
Speaker Change: Advertising expense of 800000 was unchanged year over year, our cost per pipeline add was $1545, which is down 26% compared to the prior year quarter.
Speaker Change: Operating loss for the second quarter of 2024 was $1 1 million unchanged from the second quarter of 2023, which included the license revenue at 100% margin.
Speaker Change: Net loss for the second quarter of 2024 was $1 1 million or <unk> <unk> per share. This comparison, the net loss of 1 million or four cents per share for the second quarter of 2023 <unk>.
Dave Henry: This comparison is a net loss of $1 million or $0.04 per share for the second quarter of 2023. We believe we have the capacity to process a higher volume of patient needs that our additional advertising may generate.
Speaker Change: Approximately 770000 pre funded warrants were exercised during the second quarter and approximately $7 7 million pre funded warrants are still outstanding from our offerings in 2023 and January 2020 for these.
Speaker Change: These pre funded warrants were considered common stock equivalents under GAAP and are included in our weighted average shares outstanding.
Speaker Change: Adjusted EBITDA for the second quarter of 2024 was a negative $1 2 million compared with a negative eight.
Speaker Change: 800000 in the second quarter of 2023.
Speaker Change: Looking at our year to date financial results revenue for the six months ended June 30th 2024 was $11 3 million up 20% compared with the same period a year ago.
Speaker Change: Product revenue, which excludes licensing revenue was up 47% over the first half of 2023.
Speaker Change: Your line of credit with Silicon Valley Bank, which provides a borrowing capacity of $4 million.
Speaker Change: Just on 80% of eligible receivables as defined in the agreement.
Speaker Change: As of today, we have not drawn on the credit lines.
Speaker Change: We believe our cash cash equivalents and short term investments are sufficient to fund our operations for at least the next 12 months.
Speaker Change: In May 2024, our shelf registration statement on form S. Three expired.
Speaker Change: We believe it is good corporate housekeeping to have a valid shelf registration statement on file so a new shelf registration statement is expected to be filed shortly with sizing consistent with our prior shelf.
Speaker Change: Turning to our financial guidance, given our backlog and the expected higher velocity of revenue being able to were able to record for Medicare part D patients upon product delivery. We believe we are positioned to grow revenue modestly on a sequential basis in the third quarter and we expect revenue in the range of eight <unk> to $8 five.
Speaker Change: <unk>.
Speaker Change: While a modest sequential increase.
Speaker Change: Presents between 58% and 67% year over year growth.
Speaker Change: We intend to increase our advertising spending in the third quarter and second half of the year to educate more patients and generate more and more volume at the top of the patient funnel.
Speaker Change: We believe we have the capacity to process a higher volume of patient leads that are additional advertising may generate this increased spend is aimed at positioning the company for continued growth in the first half of 2025. So we may see some incremental revenue from these efforts in the fourth quarter as well.
Speaker Change: At this time, we will pause momentarily to assemble our roster.
Speaker Change: Before we turn to your questions I wanted to mention how will you be participating in several investor conferences in the next two months Needham.
Speaker Change: I need a ninth annual virtual net tech and diagnostics one on one conference on Monday August 12.
Speaker Change: Wainwright, 26th annual Global investment conference being held September 9th through 11th in New York City and virtually in the Lake Street Best ideas Conference on September 12 in New York City.
Speaker Change: A presentation for the HC Wainwright conference there will be pre recorded and available on demand beginning September 9th at seven a M eastern time.
Speaker Change: Also available for virtual and in person investor meetings at all of these conferences go to arrange a meeting contact the conference organizer or Alternatively contact <unk> Investor Relations, who can assist you to schedule a meeting.
Speaker Change: Okay. Operator, we are ready for the first question.
Speaker Change: Our first question will come from Chase Knickerbocker with Craig Hallum Capital Group. Please go ahead.
Chase Knickerbocker: Good afternoon, everyone. Thanks for taking the question just first Paul good to hear an 80 mile Pros in July maybe just speak to the confidence around increasing capacity from there and then kind of when you would expect to need to increase that footprint on manufacturing to kind of support your internal growth.
Speaker Change: I mean, some of these old peak clinicians. They said we will be at a major conference next month in September will sign up other one P clinics at that conference to run what we call. The Coa Center of excellence classes in the fall and then typically after getting trained well evaluate their first patients.
Speaker Change: For reimbursement to place their orders and then see how those patients to make sure. They get paid as expected and then that order flow should start to build in 2025. So we don't see a lot of material increase in orders this year, but we're really building. It for next year and we've set a goal I mean I'd love to see 80 to 100 of these.
Speaker Change: P clinicians trained by the end of the year.
Speaker Change: And then as far as how that might look from.
Speaker Change: Kind of contribution to your business next year do you have any goal as far as kind of units through that channel next year any way for us to think about kind of your expectations, maybe turning the year with 100 on T X.
Speaker Change: Professionals trained.
Speaker Change: And then I'll hop back in queue. Thank you.
Speaker Change: We'll really be looking to see at what pace they want to bring <unk> to their patients.
Speaker Change: Typically we've seen this with other new OLED products in the industry.
Speaker Change: An initial order.
Speaker Change: With a patient follow that patient and their place another order.
Speaker Change: One of the things that I look at from quarter to quarter is.
Speaker Change: Backlog drops in and sometimes if theres noise in it from from changes in the way, it's calculated or one thing or another but it looked like in two Q are more than typical number of drops came from the prior backlog now there's a lot of moving parts.
Speaker Change: Right now.
Speaker Change: Anything to see there or is that noise and do you agree with that statement as well well, it's well we've been within 15% to 20% sort of backlog drop rate, that's where we've been operating recently and I think I think you could do the math the drops came out at around 48.
Speaker Change: So that that would put us at you know.
Speaker Change: 18% ish I guess, maybe of the beginning backlog, which is kind of in the range that we've been seeing.
Speaker Change: Okay, I had a higher number but perhaps there's.
Speaker Change: Some apples to oranges in there.
Speaker Change: Go through that offline.
Speaker Change: The math is $2 75, beginning backlog.
Speaker Change: 158 revenue units 213 authorizations in orders in that I think.
Speaker Change: With 282, ending backlog 48 is what falls out I think if my if my math is right off the top of my head.
Paul Gudonis: Scott, it's a very perceptive observation. We see that all the time in the fourth and fourth quarters, especially in an election year, because we're now going to be competing with Medicare Advantage plan advertising later in the year. I see all the political advertising, and then you've got holiday advertising starting to kick in. So we've increased our advertising spend now so we can get in front of more people, their family members, physicians, and so on.
Paul Gudonis: And then we typically scale it back somewhat just because the prices go up, the availability gets reduced, and then we turn it back on after the first of the year. So we have a large number of people in that pipeline. We've got people that are not in the pipeline yet, but they are interested, and our intake coordinators are following up with them. So we'll keep that flow going, but we typically see that on a seasonal basis.
Secondly.
Speaker Change: As you plan to increase the marketing side of it how do you balance that.
Speaker Change: Without.
Speaker Change: <unk> negatively impacting your bottom line maybe just.
Speaker Change: Talk a little bit about the puts and takes that you're thinking about as you as you bounce out for the remainder of the year.
Speaker Change: Okay.
Speaker Change: Alright. Thanks.
Speaker Change: I was just going to say that.
Speaker Change: I think we're starting we're seeing some improvement in that.
Speaker Change: I will call the authorization rate.
Speaker Change: You call the conversion rate, but just.
Speaker Change: If you take just the authorizations in orders and divide it by that.
Speaker Change: Beginning pipeline entering the quarter, we were at about a 19% conversion, which I think is is is higher than where we have been in terms of.
Speaker Change: Pipeline conversions into backlog.
Speaker Change: That's driven by <unk>.
Speaker Change: Medicare patients because.
Speaker Change: Theyre not lingering in the they're not lingering in the pipeline as long.
Speaker Change: We're not having to go through the reimbursement.
Speaker Change: Exercise that we have to go through with Medicare advantage patients so it.
Speaker Change: That's that's that's what's helping that and I think.
Speaker Change: No.
Speaker Change: I think that's possible.
Speaker Change: More and more.
Unnamed Speaker: Okay, great. And then just as you're looking at the clock,
Unnamed Speaker: Well, I mean, we realize that in terms of balancing things, it could potentially have an impact. It's something that we have to manage if we're to get to operating cash flow breakeven in the fourth quarter. But we want to be in a position and make sure that we're growing revenues in 2025 as well. We don't want there to be any
Operator: Again, if you have a question, you may press star then 1 to join the queue.
Speaker Change: Is there anything more.
Speaker Change: More color you can offer with regard to the hangar specifically.
Speaker Change: No other than to say.
Speaker Change: With their CEO and senior leadership over there they have a keen interest in.
Speaker Change: It will be up to them they've made a commitment to.
Speaker Change: Deploy this.
Speaker Change: Assigned people to get trained on the device itself.
Speaker Change: I really don't want to say much about any one particular customer other than that we enjoy a good relationship there and we hope to both South Florida should make this a win win win for them.
Speaker Change: Their patients themselves as a company and of course for myeloma.
Speaker Change: Excellent and then lastly for me congrats on getting 80 units out the door in July.
Speaker Change: Can you hear me.
Speaker Change: Have you kind of identify what it's going to take to get you to 120 550 to 200 units a month are there key bottleneck how difficult are they to kind of work around higher or do whatever you need to do any any color that you could share there would be helpful.
Speaker Change: Well, what we've been doing is our senior leadership team has been looking across at revenue cycle. Thank you.
Speaker Change: Sure we balance the growth in each of these functions to avoid bottlenecks.
Speaker Change: So as we increase the advertising generate more leads our inquiries we've added more people in the intake coordinator side than we've added more people.
Speaker Change: In our department of patient efficacy for reimbursements, we've added more people than in manufacturing and more people in our field clinical staff. So again its balancing all of those.
Speaker Change: Functions. So that again, we can scale this without.
Speaker Change:
Paul Gudonis: It's a whole new world for stroke survivors now and others with neurological injuries. We look forward to keeping improving the lives of many more patients in these selected markets worldwide as we scale our operations. Well, thank you again for joining our call today, and have a nice evening.