Q4 2024 Myomo Inc Earnings Call
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Speaker Change: Good afternoon and welcome to the Myomo 4th quarter 2024 earnings conference call. All participants will be in listen only mode. Should you need assistance please single a conference specialist by pressing the star key followed by zero.
Speaker Change: Conference call by management other than historical facts are forward looking statements. The words anticipate believe estimate.
Speaker Change: Specced intend guidance outlook confidence target project and other similar expressions are typically used to identify such forward looking statements. 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 analyst business financial condition.
Speaker Change: <unk> operating results.
Speaker Change: These and additional risks uncertainties and other factors are discussed in my almost filings with the Securities and Exchange Commission, including on Form 10-K, and 10-Q actual outcomes and results may differ materially from what is expressed in or implied by these forward looking statements, except as required by law Maiolo undertakes no obligation to revise or up.
Speaker Change: Any forward looking statements to reflect events or circumstances. After the date of this call today March 10th 2025.
Speaker Change: It's now my pleasure to turn the call over to my almost C. E O all get down as Paul. Please go ahead.
Paul: Thanks, Terrence and good afternoon, everyone. Thanks for joining us.
Paul: 2024 was a transformational year for my envelope capped off by a milestone fourth quarter as we generated record financial and operating results by capitalizing our prime market access for patients covered by Medicare part B.
Paul: After several years of discussions with CMS staff and medical directors, Medicare, but yet paying for the microbe powered our base dramatically qualified patients beginning April 1st of last year. This resulted in an inflection point for our business as we gave the ability to serve roughly 50% of the market that we have.
Paul: Previously turned away.
Paul: All right your last quarterly conference call I laid out three major objectives for the company one to start providing the micropro eligible standard Medicare part B beneficiaries.
Paul: Two to engage the menu orthotics and prosthetics clinics across the country.
Paul: Because of the CMS decision and now I'll be interested in becoming a distribution channel for us. It's really begin the process of establishing contracts with payers for in network status of our direct provider business.
Paul: I added two other objectives to support our growth plans and create a profitable business here.
Paul: Increase our capacity from our call center at the manufacturing operations and clinical reimbursement staff to enable continued volume and revenue growth in 2025 and beyond.
Paul: And to achieve cash flow breakeven by the end of the year as our revenue scales up.
Paul: Today I'm delighted to share the progress we've made on each of these objectives, starting with a review of our Q4 accomplishments and full year results.
Paul: Revenues were $12 1 million for the fourth quarter at $32 6 million for the full year more than double the quarterly revenue in Q4 dollars 23 at 69% higher revenue than the previous year.
Paul: Delivered 220 revenue units in the quarter double the volume of Q4 dollars 23, and more than 600 devices. During the year. We've now provided viable products to more than 3000 patients and hospital customers. So what are you playing our position as the market leader in the upper extremities paralysis category.
During Q4, we added 657 medically qualified candidates to our patient pipeline and we ended the year with a record number of nearly 1400 patients in the process of obtaining a myocardial.
Paul: Record 233 mile Pros were authorized and ordered in Q4 with more than 140 of them covered by Medicare and our direct provider channel.
Paul: With greater clarity on reimbursement, we built a team of business development specialists and clinical trainers to engage these one P clinics and this effort exceeded our expectations with 160 <unk> certified Trust.
Paul: Trained far outpacing our goal of 100.
Paul: <unk> can now begin assessing patients and building their own myopia pipelines.
Paul: One sign of progress in establishing this new channel is that our old P revenue grew to $600000 in Q4.
94% sequentially as more one P. Clerics began the process of becoming an <unk> center of excellence.
Paul: Our international business, which is primarily sales via one P providers in Germany performed well in the quarter again generating over $1 billion in profitable revenue and over $4 million for the full year, our China JV is working on a clinical trial to obtain regulatory approval to begin selling the <unk> products the patients and hospital later this year.
Paul: Moving out the old P distribution channel is a critical part of our long term strategy.
While my almost direct provider model allows us to work directly with patients and insurers Youll see channel provides a scalable way to expand reach and drive adoption being established clinical network.
The demand from all of the clinics, increasing as we recognize <unk> as a complementary solution for their patient base.
Paul: We're supporting these partners through several methods.
Paul: Clinical training and certification as I mentioned, we exceeded our initial goal by training 160, <unk> in 2024, and we expect that further scale. This effort in 2025.
Paul: With improved reimbursement clarity greater understanding of Medicare coverage is what one P clinics now having a clearer pathway to secure payment for the microbe.
Paul: And through dedicated field support we've deployed a channel business development specialists and clinical trainers to help all the clinics onboard patients navigate reimbursement optimized delivery processes.
Paul: Although this channel is still in its early stages, we expect all be driven revenue to increase meaningfully in the second half of 2025 as more clinics began generating orders.
Paul: Importantly, the high touch nature of one P. Clinics is that patients can receive in person evaluations measurements and fittings, leading to a convenient adoption process.
Paul: While reimbursement for patients covered by standard fee for service Medicare part D is going well, we still see too many patients being denied and might've brought by Medicare advantage and other commercial payers.
Paul: The situation has not improved over the last six three to six months and it reflects the same reality other health care providers face with these payers.
Paul: Our Chief Medical Officer, and legal counsel will continue to make the case for coverage by engaging with payer medical directors by advocating for patients by filing appeals and taking denials all the way to the administrative law judge hearings.
Paul: We've been successful in making the case for medical necessity and a favorable ruling for the patients smile.
Paul: On the payer front my third objective for the business for us to enter into contracts with health insurance plans. So that <unk> can be an in network provider with our direct billing business.
Paul: We continue to make progress obtaining payer contracts since.
Paul: Since our third quarter call five new contracts have been entered into or in the final stages of taking effect.
Paul: These new contracts are primarily state Blue Cross Blue Shield plans and altogether, we now have signed and pending contracts covering approximately $18 6 million lives.
Paul: As for the two additional goals I set for the company Here's how we've done.
Paul: We relocated our operations from downtown Boston to New 35000 square foot facility in suburban Burlington.
Paul: <unk> manufacturing capacity to 120 units per month more than doubling since the beginning of 2024. This enables us to produce micro revenue units clinical evaluation units and the demo units, we need to support our growing internal staff and the <unk> channel.
Paul: We also hired 100 people during the past year.
Paul: Year end head count to 190 <unk>.
Paul: We continue hiring to expand capacity to serve a larger number of patients this year.
Paul: I'll wrap up by pointing out that we over achieved our fifth objective to become operating cash flow breakeven by Q4, and we completed a successful capital raise to fund our growth plans in 2025 and beyond.
Paul: I'll, let our CFO, Dave Henry provided details on these financial statements.
Dave Henry: Thank you Paul and good afternoon, everyone.
Speaker Change: Let me start my remarks, with a review of our fourth quarter financial results.
Speaker Change: Revenue for the fourth quarter of 2024 was a record $12 $1 million. This represents a 154% increase versus the prior year quarter and was driven by a higher number of revenue units at a higher ASP.
Speaker Change: I note that revenue for both periods consisted entirely of product revenue.
Speaker Change: Our growth was fueled by record revenues from patients with Medicare part D coverage and record international revenues.
Speaker Change: We delivered a record 220 <unk> revenue units during the quarter up 106% year over year, reflecting the higher velocity of revenues, particularly from patients with Medicare part D. A.
Speaker Change: A record 78 revenue units came from authorizations in orders received in fourth quarter.
Speaker Change: Our average selling price or ASP.
Speaker Change: Increased 24% versus the prior year to approximately $54900. This figure is down slightly from the typically higher ESP and third quarter.
Speaker Change: Medicare part D patients represented 57% of total revenue in fourth quarter up from 55% of revenue in third quarter, highlighting our continued success in educating this patient population.
Speaker Change: Medicare advantage revenue grew 4% year over year, representing 22% of fourth quarter revenue.
Speaker Change: While we continue to face challenges with first time authorizations of denials.
Speaker Change: Medicare advantage peels process remains slow and frequently requires us to escalate cases to administrative law judge hearings to address these hurdles we are strengthening our pay our payer engagement strategy.
Speaker Change: Advocating for expanded coverage with medical directors and collaborating with trade groups regarding coverage deficiencies by Medicare advantage organizations.
Speaker Change: For Medicare part B and certain commercial payers are recognizing revenue at the time of mild drug delivery and the amount expected to be paid by both the primary and supplemental insurance payer with the exception of Medicaid.
Speaker Change: Medicare advantage payers are in most cases now reimbursing us based on the fees published by CMS Encouragingly, 90% of our fourth quarter product revenue was recognized at either shipment or delivery compared with 79% in the fourth quarter of 2023, reflecting a more predictable revenue cycle.
Speaker Change: As reimbursement processes become more established.
Speaker Change: 81% of our revenue in the fourth quarter came from the direct selling channel compared with 65% in the prior year quarter International.
Speaker Change: Our revenue was a record one 5 million in the fourth quarter, representing 12% of quarterly revenue primarily from Germany.
Speaker Change: In the fourth quarter of 2020 for both pipeline additions in the total pipeline reached New records. Our pipeline stood at 1389 patients at the end of the fourth quarter, an increase of 33% year over year.
Speaker Change: In fourth quarter alone, we added a record 657, new patients which was up 72%.
Speaker Change: Prior year's fourth quarter.
Speaker Change: 33% of the fourth quarter pipeline additions, where Medicare part D patients at 18% of our quarter end pipeline, our Medicare part D. Patients. This reflects the increased velocity of moving Medicare patients through the process of obtaining <unk> pro as compared with players payers that require preauthorization.
Speaker Change: Backlog represents insurance authorizations in orders received but not yet converted to revenue in the case of Medicare part D patients those patients for whom we have collected medical records that qualified for delivery based on our inclusion criteria. We ended the quarter with backlog of 272 patients.
Speaker Change: 18% versus the prior year. This includes 101 Medicare part D patients that have been qualified for delivery of appropriate medical documentation.
Speaker Change: Attributing to our backlog we have received a record 233 authorizations in orders during the fourth quarter, an increase of 27% year over year.
Speaker Change: Gross margin for the fourth quarter of 2024 was 71, 4% compared with 65, 3% for the prior year quarter. The increase was driven primarily by a higher ASP and higher fixed cost absorption.
Total operating expenses for the fourth quarter were $8 9 million up 60% over the fourth quarter of 2023.
Speaker Change: Increase was driven primarily by higher head count throughout the organization as we increase capacity.
Speaker Change: Higher R&D expenses and higher incentive compensation accruals.
Speaker Change: <unk> expense declined 6% year over year to about $800000, reflecting typical fourth quarter cutbacks.
Speaker Change: Cost per pipeline add fell 46% to $1224, reflecting greater efficiency and performing initial patient evaluations.
Speaker Change: Operating loss for the fourth quarter narrowed to $200000 compared with $2 $4 million operating loss in the prior year quarter.
Speaker Change: Net loss for the fourth quarter of 2024 was $300000 or <unk> per share.
Speaker Change: This compares with a net loss of $2 5 million or <unk> <unk> per share for the fourth quarter of 2023.
Speaker Change: Approximately $7 $1 million pre funded warrants are still outstanding from our offerings in 2023 and January 2024. These pre funded warrants are considered common stock equivalents under GAAP and are included in our weighted average shares outstanding.
Speaker Change: A highlight for the quarter was achieving positive adjusted EBITDA, which we reached for the first time in our history. Adjusted EBITDA was about $200, a significant improvement compared with a negative $2 1 million for the fourth quarter of 2023.
Speaker Change: Looking at our full year financial results revenue for 2024 totaled $32 6 million up 69% from 2023, excluding license fees in 2023 product revenue increased 86%.
Speaker Change: Our gross margin in 2024 was 71, 2% up from 68, 5% in 2023.
Speaker Change: Excluding license fees gross margin on product revenue was 65, 3% in 2023.
Speaker Change: Operating expenses for 2024, or $29 4 million, an increase of 37% compared with 2023.
Speaker Change: Operating loss for 2024 was $6 2 million versus an operating loss of $8 2 million in 2023.
Speaker Change: Net loss was $6 3 million or <unk> 16 per share and this compares with a net loss of $8 1 million or <unk> 28 per share for 2023.
Speaker Change: Adjusted EBITDA improved to a negative $5 1 million for 2024, compared with a negative $7 million for 2023.
Speaker Change: Turning to our balance sheet and cash flows are key financial milestone for 2024 was achieving positive operating cash flow breakeven in fourth quarter. I am pleased to report that we achieved that objective of $3 4 million in cash from operations in the fourth quarter and free cash flow of $2 5 million.
Speaker Change: We define the latter as cash provided by operations less capital expenditures.
Speaker Change: Cash cash equivalents in short term investments as of December 31, 2024, or $24 9 million.
Additionally, we maintain a $4 million accounts receivable credit line, which is currently undrawn.
Speaker Change: In February we entered into an amendment to our line of credit facility with Silicon Valley Bank.
Speaker Change: In addition to changes to increase availability under the line. We also entered into a $3 million term loan facility, which can be drawn at any time until February 28 2026.
Speaker Change: We believe our cash and cash equivalents are sufficient to fund our operations for at least the next 12 months.
Speaker Change: Looking ahead, our financial guidance for 2025 reflects expectations for continued strong growth and further strategic investments in scaling operations.
Speaker Change: Q1 revenue is expected to be between nine and $9 5 million, reflecting typical seasonality you had expected to be up 140% to 153% over the prior year.
Speaker Change: For the full year, we're introducing guidance for 2025 revenue to be 50 million to $53 million representing growth of 54% to 66% over 2024.
Speaker Change: The proceeds from our financing in December 2024.
Speaker Change: Our being in December 2024 are being invested in growing our direct provider channel, which we can control while we work on accelerating revenue growth in the <unk> channel.
Speaker Change: We expect to nearly double our advertising expenses in 2025 to over $6 million and to hire additional personnel on a clinical reimbursement and operations functions to help us serve a larger number of patients.
Speaker Change: Patients obtained through our higher advertising budgets are not expected to generate revenue until the second half of 2025.
Speaker Change: Our revenue profile is expected to be weighted towards the second half of the year compared to the first half from.
Speaker Change: From a cash standpoint, we expect negative cash flows in the first three quarters of 2025.
Speaker Change: Second quarter being the highest first quarter due to incentive compensation payments. However, should we meet our revenue objectives, we anticipate a return to positive operating cash flow by fourth quarter 2025.
Paul: That financial overview ill turn the call back to Paul.
Speaker Change: Thanks, Dave well my elbow is at the forefront of a new and expanding category robotic orthotics dropper limb paralysis with over 3000 patients third we are the clear leader in this space and several factors strengthen our position.
Speaker Change: First our proprietary my electric control system allows users to regain our mobility based on their own bureau signals offering level functionality that traditional static where both of these can't match.
Speaker Change: Second our multichannel marketing strategy, which spans direct billing all the clinics and international distribution.
Speaker Change: A broad footprint, that's difficult for new entrants to replicate.
Speaker Change: The regulatory approvals commercial operations reimbursement traction at clinical expertise, we have built a strong first mover advantage.
Speaker Change: Lastly, our commitment to innovation ensures that we stay ahead, we're actively investing in R&D to build the next generation <unk> platform.
Speaker Change: Key functional capabilities and open new patient populations in the future.
Speaker Change: For these reasons and more we believe <unk> well positioned to sustain that leadership as this market grows.
Speaker Change: As we look ahead several key growth drivers position us for continued success.
Speaker Change: Demand for Medicare part D and Medicare advantage beneficiaries as expected increase with more awareness one P adoption will accelerate as more clinics complete training and establish their own my approach patient pipelines.
Speaker Change: We are increasing efforts to educate more patients families and commissions baldor solution for chronic arent paralysis.
Speaker Change: I've mentioned, we expect to nearly double our advertising spend to more than $6 million. This year we.
Speaker Change: This should result in more leads coming into our website and call center and a growing number of new candidates entering the patient pipeline.
Speaker Change: Since it can take four to six months or longer sometimes where patients go through the process of obtaining microprobe, we expect our orders and revenue to grow more significantly in the second half of the year.
Speaker Change: We also expect <unk>.
Speaker Change: Orders to grow in the second half as more centers of excellence are trained on the micropro. They build their patient pipeline and go through the revenue cycle process through over my approach to their patients.
Speaker Change: We're supporting these LNP clinics with more training sessions and in person support across the country. We.
Speaker Change: We had a very large turnout of hanger clinicians at the educational sessions, we conducted in January at Hangers National clinical meeting.
Speaker Change: This year, we will also benefit from a two 4% price increase at CMS published as of January one, bringing the Medicare <unk> to $67453 for the Micropro G, which is over 90% of our unit volume at $34284 for the motion W model.
Speaker Change: So with that update and overview of our plans for 2025, we're now ready to take your questions operator.
Speaker Change: We will now begin the question and answer session.
Speaker Change: To ask a question you May press Star then one on your telephone keypad.
Speaker Change: If youre using a speakerphone please pick up your handset before pressing the keys to withdraw your question. Please press Star then two.
Speaker Change: At this time, we will pause momentarily to assemble our roster.
Speaker Change: And before we turn to your questions I want to announce that we will be hosting our first ever investor and analyst day on June 18th.
Speaker Change: This does that will be held at our new facility here in Burlington, Massachusetts, and among other things that will allow for a firsthand look at our operations as well as the opportunity to meet members of our executive team and learned about the impact myeloma was having a patients.
Speaker Change: I'll be announcing the details in the coming weeks, but in the meantime, if you're interested in attending please contact our CFO, Dave Henry our truth to tell at Alliance Advisors IR you can reserve responses.
Speaker Change: We will also be available via webcast.
Speaker Change: Okay, operator, we're ready for the first question and the first question comes from Chase Knickerbocker with Craig Hallum. Please go ahead.
Chase Knickerbocker: Good afternoon, Paul and Dave Congrats on the great quarter and guide here.
Speaker Change: Just first from me.
Speaker Change: Can you just walk through your assumptions.
Speaker Change: On a unit of revenue contribution in 2025 that you that you assume in guidance from the <unk> channel.
Speaker Change: Maybe what percentage of either of those items and then can you just share what goals you have for that channel and 25 is it clinicians trained like last year or is it ordering clinicians just walk us through what we should be benchmarking you too.
Speaker Change: We plan to still have.
Speaker Change: More of our revenue coming from our direct provider business and we are expanding that we recently hired a few more CPO who's up around the country plus other clinical support staff and we're investing as I mentioned earlier doubling the advertising spent so that channel, which as Dave said, we control we manage it that will continue to grow significantly.
Speaker Change: This year.
Speaker Change: And the one P channel will start to see already these green shoots we saw revenues double from Q3 to Q4 of last year.
Speaker Change: We had 160 trained clinicians at the end of the year. We've got more training is already planned and ongoing so we expect that channel will kick in but the majority of our revenue will still come out of our direct provider channels in this coming year.
Speaker Change: Yes.
Speaker Change: Yes actually.
Speaker Change: I mean OSP revenue for this year I would say it was.
Speaker Change: Maybe a little over $1 billion somewhere in that neighborhood and so I would ask.
Speaker Change: Haven't given we're not giving specific guidance on what we think the LNG OMB channel will look like but we do expect meaningful growth I would say in that channel in 2025.
Speaker Change: Got it and then on the direct business. How quick can you ramp advertising spend maybe give us a look at what you kind of expect from a spend perspective in Q1, and then as we think about pipeline additions.
Speaker Change: It's really really efficient marketing spend in Q4, I mean, do you expect that kind of efficiency to continue or kind of walk us through how we should think about that.
Speaker Change: On the.
Speaker Change: I think the answer to your second your second question first I think.
Speaker Change: On the cost per pipeline out I think I.
Speaker Change: I think it's too early to tell as to whether that will continue to be a bit low.
Speaker Change: <unk>.
Speaker Change: We're working through some changes that.
Speaker Change: Made with with Facebook and <unk>.
Speaker Change: And we're seeing how those changes are affecting what we call. We went through this I don't know if you recall, we went through this a couple of years ago.
Speaker Change: Right now I think things are.
Speaker Change: On track from a lead generation standpoint, so we've worked our way through that.
Speaker Change: But we'll see what we get to in terms of the end of the quarter by what expect.
Speaker Change: Sitting here right now I think it maybe.
Maybe see a bit of an increase in the cost per pipeline out here in the.
Speaker Change: First quarter, but.
Speaker Change: And then in terms of the pipeline adds we'll see what we came up with that.
Speaker Change: Decent first couple of months, and we'll see where things end up here in first quarter.
Speaker Change: Got it and maybe if we look at 25 from an ASP perspective, you'll start to have some on P volumes kind of working through the model in the back half of the year, but I mean, any general thoughts on Asps.
Speaker Change:
Speaker Change: As we move through the year.
Speaker Change: Well you have is you have the impact from the higher fees, which were which are now filtering through all the payers and we are seeing pants payments not only from CMS, but also other Medicare advantage payers based on those new published fees, so there'll be a little bit of a asps up.
Speaker Change: Lift from that offset as you said from.
Speaker Change: A higher mix of Valenti revenue.
Speaker Change: That we expect in the second half.
Speaker Change: Got it thanks for the questions guys. Congrats again.
Jason: Thanks, Jason.
Speaker Change: The next question is from Scott Henry with AGP. Please go ahead.
Scott Henry: Thank you good afternoon.
Speaker Change: Great results and.
Speaker Change: Great outlook for 2025.
Speaker Change: My congratulations to you guys.
Speaker Change: That's quite an accomplishment.
Speaker Change: Couple of questions.
Speaker Change: When we look at the model and we look at the metrics.
Speaker Change: It could grow from 12 million to two even higher.
Revenue per quarter.
Speaker Change: Couple of ways. It can go up.
Speaker Change: One of them would be pipeline adds do you think you know.
Speaker Change: 657 or are you starting to get near the peak or do you think there is other step ups you can get into the seven hundreds maybe the 800.
Speaker Change: Should we think of them.
Speaker Change: The potential for the top of the funnel there.
Speaker Change: Well I think to get to the 50% to $53 million in revenue we have to increase the pipeline of that so we don't think we've reached our peak.
Speaker Change: And I think we've gotten we've got a very efficient organization I think we've built now.
We have now separate people in the organization that all they do is these initial valuations of patients to get them into the pipeline, we try to encourage as many patients as possible to get into that.
Speaker Change: We have an online waiting room doxy waiting around that.
That we use quite extensively and so we're getting pretty good at that frees up our our our regional <unk> to be out there in the field to reshape captures in delivering mile froze is basically their entire jobs. So we're becoming much more efficient at it and then with the higher.
Speaker Change: Lead generation.
Speaker Change: We expect.
Speaker Change: More dollars that we spend that should result in more patients coming into the top of the funnel beyond what we've been able to add here, so far and Scott I'll add to it.
Speaker Change: It's a very deep pool of patients right over 3 million cases of chronic arent paralysis in the U S and if it's just 10 or 20% of them that are eligible candidates for a myopic still hundreds of thousands of patients and so.
Speaker Change: We're expecting to see a continued linear growth in the number of patient, Kansas finding out about us as we increase the advertising spend and the other thing that's working in our favor is the rehab therapies that are now starting to work with <unk> patients. After the patient gets their device they have to go through training with the micro.
Speaker Change: They are now seeing patients that could be a candidate and referring them to us as well so we're starting to see that.
Speaker Change: Momentum happen too.
Speaker Change: Okay great.
Speaker Change: And shifting to gross margins.
Speaker Change: She came around 75% in Q3, 71% in Q4.
Speaker Change: As you get to this higher volume a little higher price point as well.
Speaker Change: How should we think about 2025 to look more like Q3 or Q4 or somewhere in the middle.
Speaker Change: Yes, I would expect that we're in the new facility now so we have a bit more overhead.
Speaker Change: And that is being offset by.
Speaker Change: At a higher ASP opportunity.
Thanks.
Speaker Change: <unk> 70, 71% ish kind of gross margin would be something that I would be modeling for.
Speaker Change: For 2025.
Speaker Change: Okay great.
Speaker Change: And then.
Speaker Change: Well when we think about Opex, let me just looking at the numbers.
Speaker Change: And hearing the commentary.
Speaker Change: I mean should we be thinking about kind of $10 million a quarter in opex, that's all in including stock comp.
Speaker Change: As reported or could it be higher than that just trying to get some yes.
Speaker Change: I think it's I think it could be higher than that I think full year opex step definitely starts before.
Speaker Change: Okay.
Speaker Change: Great. That's helpful final question more of a big picture question.
Speaker Change: When you think about the reimbursement environment, which.
Speaker Change: Tremendous strides in 2024.
Speaker Change: When we look at 2025 would you categorize it as.
Speaker Change: Consistent.
Speaker Change: Or even improving over 2024, or perhaps getting a little worse in 2024, just trying to get a sense of.
Speaker Change: Whether that's a headwind or tailwind.
Speaker Change: Right now I'm looking at it as being consistent.
Speaker Change: Certainly with the Medicare part B allowable plus this price increase.
Speaker Change: Fact that we're now entering into contracts in several states with some of the blues.
Speaker Change: There is a defined price based off where the Medicare allowable, which means that those patients will be covered and we don't have to go through the process of obtaining a single case agreements like we had in the past so that should accelerate the revenue cycle on the patients that have those plans.
Speaker Change: And then hopefully with all the public pressure as government investigations of these Medicare advantage plans.
Speaker Change: With that.
Speaker Change: That pressure may improve that environment to get back to where we were with these Medicare advantage plans.
Speaker Change: Couple of years ago.
Speaker Change: Okay, great. Thank you for the color.
Speaker Change: Thanks for taking all the questions great results. Thanks Kim.
Scott Henry: Thanks Scott.
Speaker Change: The next question is from Anthony Vendetti with Maxim Group. Please go ahead.
Thanks.
Anthony Vendetti: I was wondering do you have the cost per pipeline add.
Speaker Change:
Speaker Change: Yeah, It was $1226.
Speaker Change: <unk> thousand 226, okay great.
Speaker Change: And then.
Speaker Change: I'm just curious.
Speaker Change: Yeah.
Speaker Change: Obviously, a lot of companies deal with this denied claims right.
Speaker Change: And then there.
Speaker Change: Appeal process recovery process what percent of denied claims are you able to recover.
Speaker Change: Overtime.
Speaker Change: Yes.
Speaker Change: So.
Speaker Change: So denied claims like.
Speaker Change: We file an authorization requests not even a claim but most of the dials Tom at the authorizations change.
Speaker Change: Okay sure Yeah, Let's say we had initially authorized nation was initially denied.
Speaker Change: And you go back and appeal or you try to make the.
Speaker Change: The medical necessity case.
Speaker Change: What percentage of those do you get overturned.
Speaker Change: Well historically, we had been worrying about 40% to 50% of those over time.
Speaker Change: Percentages come down somewhat.
The time has also been likes it.
Speaker Change: We met a patient.
Speaker Change: It's been in the pipeline for over two years with 40 finally got approval others microprobe. So.
Speaker Change: Timeline can stretch out that's why we're pleased that we're able to serve these Medicare part D patients more readily.
Speaker Change: Right now.
Speaker Change: Okay. Okay.
Speaker Change: And then.
Speaker Change: And in terms of just getting physicians comfortable do you have do you have specific.
Speaker Change: Physician training goals for 25.
Speaker Change: Well, what we do is when a patient is qualified for my approach, we send them to their physician they have to have an evaluation by the physician.
Speaker Change: And get all the clinical documentation and get a prescription and so on.
At that point, we will send that patient physician one of our micro brochures, we make them.
Speaker Change: Knowledgeable about the fact that there is the clinical research available.
Speaker Change: Either local conditions, our chief Medical officer will reach out to that physician too.
Speaker Change: Educate them about the microprobe, we're also starting to turn more of the conferences.
Speaker Change: Physicians attendees or rehabilitation medicine, physicians and others. So we're getting the word out that way with a lot more speaking engagements as well.
Okay, Great and then this is probably more of a <unk>.
Speaker Change: Financial follow ups, So you said youre going to.
Speaker Change: At least double the advertising budget to <unk>.
Speaker Change: $6 million. This year did you say capex overall should be greater than 10 million for 2025.
Speaker Change: If not if you could just clarify Oh no no.
Speaker Change: No.
Speaker Change: Capex should we still even though we had a.
Speaker Change: And we had capex recently over the last quarter or two just because of our move to the Burlington facility here, we had to furnish it and things like that but.
Speaker Change: There'll be some smaller amount of capex as we move into the last 7500 square feet here.
Speaker Change: Here in Burlington by mid year.
Speaker Change: But overall I would not expect capex to be.
Speaker Change: Yeah.
Speaker Change: I would think $1 million or less for capex.
Speaker Change: Okay, Okay, so you're going to up the advertising budget to around $6 million.
Speaker Change: Move is largely done so capex for 'twenty five around $1 million got it yes, yes, like I said, except for the <unk>.
Speaker Change: 7500 square feet that will that will partner shown equipped and.
Speaker Change: Mid year.
Speaker Change: Alright Thats helpful. Thanks for the clarification I appreciate it I'll hop back in the queue.
Sean Lee: The next question is from Sean Lee with H C. Wainwright. Please go ahead.
Sean Lee: Thank you and good afternoon, Paul and David.
Speaker Change: Congrats on a great quarter and year.
Speaker Change: Hi, My first question I, just wanted to digging a little deeper on the reimbursement front. So quickly authorization denials what are the main reasons that you see.
Speaker Change: For these denials.
Speaker Change: Is there anything as a company can do to reduce frequency.
Speaker Change: So remain.
Speaker Change: For denial and insurance company will present us, let's say well devices experimental and investigational.
Speaker Change: And we knock that down because we say look we've already had 3000 these units pay for CMS.
Speaker Change: If approved this device for coverage so lot to see it's not experimental investigational. The VA has approved the device for 10 years now.
Speaker Change: The other would be medical necessity.
Speaker Change: And that's why we depend on the physician's medical documentation pointing out that this is reasonable and medical.
Speaker Change: Necessary for these patients based on their chronic arent paralysis, they've tried everything else occupational therapy may be botox. Other interventions alright. This is the least costly most functional option at this point and many of these insurance plans will pay for rate on arm prosthesis. So if you were in <unk>.
Speaker Change: Arm or hand, those policies will cover that.
Speaker Change: That type of device to restore function.
Speaker Change: Pro does the same free without having to have the amputation fact, we've saved some arms from an amputation because the patient has discovered a myocardial so thats, how we try and knocked out those arguments are chief Medical officer Dr. Coleman.
Speaker Change: Meetings with these medical directors to make the case and will testify in front of that ALJ judges.
Speaker Change: To make that case and we win a number of those cases.
Speaker Change: Great. Thanks for the additional color.
Speaker Change: With regards to the OMB channel for 2025, what sort of growth can we expect from that versus compared to your traditional advertising.
Yeah, We mentioned I think I answered this question a little bit earlier, I mean at the <unk>.
Speaker Change: <unk> channel was about somewhere in the neighborhood of $1 million give or take a few hundred thousand in.
Speaker Change: In 2025, and we expect that we're not giving specific guidance for that channel in 2025, where we expect the growth in that channel to be meaningful in.
Speaker Change: <unk> 2025.
Speaker Change: ICF Olson.
Speaker Change: And my last question is.
Speaker Change: International market, how should we think about that in 2025.
Speaker Change: Well, Germany has performed very well in many of the statutory health insurance plans that are covering the myocardial.
Speaker Change: We have over 101 clinical partners trained and up and running around the country.
Speaker Change: So our German team has had steady track record of growth year over year.
Speaker Change: They're expanding their marketing they are expanding their clinical staff and business development staff. So we should see that market continuing to grow and we continue to invest in Germany opening other international markets is more time consuming.
Speaker Change: A couple of years of investment to get reimbursement just like we had to invest here in the U S and Germany.
Speaker Change: So our approach is at this point.
Speaker Change: Keep doing what's working which is growing our German market to over 80 million population. So that means there's over 800000 paralyzed arms of the country and again, we're just in early stage of penetrating a very large market and say what itself. Good economy overall, despite some near term turbulence here, but they like high tech.
Speaker Change: Alex and they've got a very good health care system.
Speaker Change: Great Thats, all I have and thanks again for taking my questions. Thank.
Sean Lee: Thank you Sean.
Sean Lee: Again, if you have a question. Please press Star then one.
Speaker Change: The next question is from Edward Woo with <unk> capital. Please go ahead.
Edward Woo: Yeah, I also like to give my congratulations on a great quarter and keep it up my question is on the terrorists are there any risks to your 70, 71% gross margin where possible tariffs and also what the tariffs impact your sales into Germany.
Speaker Change: Well right now.
Edward Woo: Our supply chain team to look at this.
Edward Woo: Don't see any impact on the tariffs for what we purchased right now.
Edward Woo: Most of it is sourced from the U S a little bit.
Edward Woo: <unk> low cost components from China, but so that should be de minimis and so on right now.
Edward Woo: There are no tariffs coming back at us for our exports to Germany, but it could raise the price to the old providers there in Germany.
Edward Woo: Which they may be able to markup to the insurance companies.
Edward Woo: Still to be determined and as you know the tariffs are on one day, if they are off the next day.
Speaker Change: That sounds good well thanks for answering my questions I wish you guys. Good luck. Thank you.
Anthony Vendetti: Alright, Thank you Anthony.
Anthony Vendetti: This concludes our question and answer session I would like to turn the conference back over to Paul <unk> for any closing remarks.
Paul: Thank you operator, well I want to thank the <unk> team here in the United States and in Germany.
Paul: Growing network of all preclinical partners.
Paul: Have hustle therapists, who help patients regain mobility and our investors who support our mission in making this life changing technology available to a large patient population that had been previously told you never use it arm again for the rest of your life.
Speaker Change: Those are the case study of one of our mindful recipients that was provided to me by Mark Warner otherwise own Pete a center of excellence in Arizona about one of those Medicare part D patients.
Speaker Change: We recently set a 58 year old male with suffered a stroke 12 years ago, which affected us right dominant earn this husband and father of two children was not able to find employment following its joel forcing him to take on the role of Mr Mountain instead.
Speaker Change: Since <unk> made tremendous gains is regained increased accurate range of motion and is right on hand, as well as his right shoulder.
Speaker Change: After two months of using this milestone.
Speaker Change: Increased strength.
Speaker Change: Such that Guy you can out carrier bag perform other household tasks with his right arm.
Speaker Change: He has also experienced reduced specificity and tone in his right arm from using as my April enabling him to return to jogging on a treadmill. This is Jim.
Speaker Change: The restoration of reciprocal arm swing.
Speaker Change: Success with its <unk> and its desire to help other people with arm disabilities has now led to his new role as <unk> ambassador for arise one Pete.
Speaker Change: Always like this that drive us forward by continuing to serve more individuals' directly and through our partner one P clinics will keep building a growing and profitable company.
Speaker Change: Thanks, again for joining our call today and have a nice evening.
Speaker Change: The conference has now concluded. Thank you for attending today's presentation you may now disconnect.
Speaker Change: Okay.
Speaker Change: [music].