Q1 2025 Myomo Inc Earnings Call
Speaker Change: Good afternoon, and welcome to the Myomo's first quarter 2025 earnings conference call. All participants will be in listen only mode.
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Speaker Change: After today's presentation, there will be an opportunity to ask questions. To ask your question, you may press star, then one, on a touchstone phone. To withdraw your question, please press star, then two. Please note, this event is being recorded. I would now like to turn the conference over to Tirth Patel. Please go ahead.
Speaker Change: Thank you, operator, and good afternoon everyone. This is Tirth Patel with Alliance Advisors IR.
Speaker Change: Welcome to the Myomo First Quarter 2025 conference call. With me on today's call are Myomo's Chief Executive Officer Paul Gudonis and Chief Financial Officer Dave Henry.
Speaker Change: Before we begin, I'd like to caution listeners that statements made during this call by management other than historical facts are forward-looking statements.
Speaker Change: 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.
Speaker Change: These four-reliquing statements are not guarantees of future performance and may involve and are subject to risks on certain teeth and other factors that may affect my almost business financial condition and operating results.
Speaker Change: These risks, uncertainties, and other factors are discussed in Myomo's filing for the Securities and Exchange Commission. Actual outcomes and results may differ materially from what's expressed in or implied by these forward-looking statements.
Speaker Change: Furthermore, 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 today, May 7, 2025.
Speaker Change: It's now my pleasure to turn the call over to Myomo CEO , Paul Gudonis. Paul, please go ahead.
Paul Gudonis: Thanks, Tirth, good afternoon, and thank you all for joining us today.
Paul Gudonis: During our Q4 Ernie's call in March, I commented on our first mover advantage with MyoPro, and I shared that we are the technology leader with an exciting product development roadmap. And we also earmarked a good portion of the proceeds from our December 2024 capital race to expand our R&B capabilities.
Paul Gudonis: Already in 2025, we've introduced two product upgrades, the Mark II clinical unit and the MyoPro
Paul Gudonis: To demonstrate how a patient can move their arm in hand with our powered arm brace, and to conduct an evaluation of the patient to see if they're a good candidate for their own custom myoprop. This device is critical to developing our new orthotics and prosthetics O&P distribution channel, so they can recruit and build their own patient pipelines.
Paul Gudonis: And just last week we now launched of the MyoPro 2X, an upgraded version of the MyoPro 2 Plus.
Paul Gudonis: The launch of the Myropho 2X reflects our strategy of continuous innovation based on real-world patience and clinical experience and aims to improve independent device use and support of daily functional tasks.
Paul Gudonis: After the thorough pride development process, including clinical input from our own staff and other old and deep professionals, and the knowledge gained from helping over 3,000 patients who have already received the myochrome, we're excited about the benefits of this new version of our flagship device.
Paul Gudonis: MyoPro2X is our most advanced product that leverages our first mover position. They've already started to take orders for it from our direct provider business and our own P-Channel partners.
Paul Gudonis: If there's more innovation to come as we continue development of the next generation of Myomo 3 and other enhancements that will be delivering to patients in the future.
Paul Gudonis: Now on the Q1 metrics, we're reporting strong year-over-year revenue growth, including from Medicare patients.
Paul Gudonis: The conclusion of Q1 marked the one-year anniversary of Medicare coverage of the Myopro Orthosis from medically qualified patients, as patients covered by Part B have had access to the Myopro with the lump sum fee schedule since April 1, 2024.
Paul Gudonis: While the first quarter exhibited the typical seasonality of previous years, we achieved strong revenue growth while addressing some temporary speed bumps.
Paul Gudonis: The changes in how marketers can direct their messages to individuals with certain health conditions made by Meta, which operates Facebook and other social media platforms impacted our lead generation efforts in January and February .
Paul Gudonis: We saw a similar downturn in patient leads when Apple introduced restrictions on personal health information on the iOS mobile operating system several years ago.
Paul Gudonis: As we've done before, we've successfully adjusted our advertising approach and improved generation of leads in March and a record number of leads in April . However, we have fewer patients moving through the authorization process in Q1 and in our Internal Plants.
Paul Gudonis: Physician, Medicare Advantage, and certain other commercial insurance plans continue to deny or delay authorizations for large percentage of physician orders for a myoprop.
Paul Gudonis: As a result of these two factors, our authorizations were only up 18% year-over-year, a cost for pipeline ad increased, and after delivering approximately 180 units in the quarter, our backlog was down year-over-year, heading into Q2.
Paul Gudonis: So while he expects slightly lower revenue than Q2 versus Q1, we've addressed these new challenges and have some very positive metrics to report today as we reaffirm our financial targets for the year.
Paul Gudonis: He delivered 182 myopro revenue units in the first quarter, up 100% from Q-120-24, and our ASP increased by about 30% over the prior year.
Paul Gudonis: Q1 revenues increased by more than 160% to 9.8 million with Medicare Part B patients representing 60% of revenue.
Paul Gudonis: We added a record 700 medically qualified candidates for our patient pipeline during Q1 and ended the quarter with a record number of nearly 1,500 patients in the process of obtaining a Myo Pro.
Paul Gudonis: 213 Myopros were authorized and ordered in Q1, and our international business, which is primarily sales via O&P providers in Germany, performed well again, generating over 1.3 million in revenue.
Paul Gudonis: Earlier this year, we completed our move from downtown Boston to our new facility in Burlington, Massachusetts, with manufacturing capacity now to 120 units per month, which includes revenue units, Myo Pro 2X, demo units, and the new Mark II clinical evaluation
Paul Gudonis: We're now planning for the next phase of floor space expansion to meet our forecast demand for later this year and beyond.
Paul Gudonis: Well, we increased our advertising spending Q1. As I mentioned, we were temporarily impacted by how meta-changed its policies about personal health information that is available to the marketers on Facebook.
Paul Gudonis: It took our ad agency several weeks to adjust to these changes so our advertising efficiency was down to the first half of the quarter, resulting in a higher cost with pipeline added at that time.
Paul Gudonis: We still added a record 700 candidates to the patient pipeline and based on our results that we've seen in March and April , we have rebounded well with the modifications we put in place.
Paul Gudonis: We continue to expand our presence in the own detail, with outreach by our team of account reps and clinical trainers and participation in various industry events.
Paul Gudonis: We've been recruiting and training on the industry practitioners on the Myo Probe and these clinicians are now ready to move into the next phase of becoming a certified Myo Pro Center of Excellence.
Paul Gudonis: Myopro is clinically complex and these external clinicians must make up a large commitment to learn the product, educate their local referral sources, and work patients by patients and insurance by insurance for coverage.
Paul Gudonis: Even so, these early adopters in the OWNP channel are making a necessary commitment to begin dispensing the myoprosis or qualified patients.
Paul Gudonis: We've now done initial training for more than 300 CPOs, up from 160 at the start of the year, so these CPOs can become, begin assessing patients and building their own myopropyplines.
Paul Gudonis: Our ODP revenue was $475,000 in Q1, up 87% from a year ago, with down $125,000 to quench we were reflecting the seasonality of this channel.
Paul Gudonis: For our O&P partners, we offer robust remote and on-demand training for our learning management system. While most of the clinical training is being completed in person at the O&P clinics, and facilitated by our growing team of clinical trainers. We're adding more O&P clinics across the country, including more hangar regional offices who can engage with their patients.
Paul Gudonis: After these sessions at their locations, we support our own deep partners with other training in the field.
Paul Gudonis: For example, we regularly join clinical and services to demonstrate our technology of service in other clinicians to treat patients that might benefit from a myoprole.
and with the release of the new MIRO Pro 2X.
Paul Gudonis: We are conducting multi-day certification classes at ONP clinics which include evaluating patients from IOPROB to expand their patient pipeline and revenue potential.
Paul Gudonis: We expect this channel's growth to accelerate during the rest of the year, however order flow will depend on the reimbursement environment and the insurance mix of the patients they see.
Paul Gudonis: As for the current reimbursement environment, not much has changed since our last call. Access for patients covered by standard fee-for-service Medicare Part B is going very well and has been the largest source of our growth over the past 12 months.
Paul Gudonis: But too many patients are still being denied a Myo Probe by Medicare Advantage and certain other commercial payers. This is the same situation impacting other healthcare providers and result in fewer observations and orders than we anticipated in the first quarter.
Paul Gudonis: In our direct billing channel, we advocate for the patients on a case-by-case basis by working with their physician and CPL to determine the clinical chemistry and obtain appropriate medical records and documentation, all of which are needed to request an authorization
Paul Gudonis: If our request are denied, we file appeals and when necessary, take insurance
Paul Gudonis: We're often successful, but too many times patients are not able to get a myoproam because of these high denial rates or the timeline for resolution for pre-authorization and remain lengthy and variable.
Paul Gudonis: To improve this insurance access, our chief medical officer is working closely with legal counsel and will continue to engage with payer medical directors to cover the mile pro for their enrollees.
Paul Gudonis: In addition to working to change payer policies, we continue to enter into contracts with health insurance plans to become an in-network provider with our direct billing business.
Paul Gudonis: We signed several new state contracts since the beginning of the year, and we have negotiations underway with some of the national health insurance plans.
Paul Gudonis: At this point, we've executed or the process of finalizing contracts covering 25 million lives including several new state blue cross blue shield plants.
Paul Gudonis: Before I pass the call to Dave, it proves we shared that we overachieved our goal of breaking even cash flow from operations in Q4 of 2024.
Paul Gudonis: and we completed a successful capital race at the end of last year to fund our growth plans for this year and beyond. Reactively deploying those funds and making investments in marketing, product development and the own feed distribution channel, as it worked to be cashable positive again before the end of the year.
Speaker Change: And I'll let her CFO Dave had me provide some more details on her financial performance.
Speaker Change: Thank you, Paul. Good afternoon, everyone. Let me start my remarks with a review of our first-quarter financial results. Revenue for the first quarter of 2024 was 9.8 million. This represents a 162% increase versus the prior year quarter and was driven by a higher number of revenue units and a higher ASP.
Speaker Change: Our growth was fueled by revenues from patients with Medicare, RV coverage and international revenues.
Speaker Change: We delivered 182 Myo Pro Revenue Units during the quarter of 100% year over year reflecting the higher velocity of revenues, particularly from patients with Medicare Part B. Record 81 revenue units came from authorizations and orders received in the first quarter.
Speaker Change: buyer velocity of revenue is also reflected in the fact that approximately 90% of our first quarter revenue was recorded at either shipment or delivery.
Speaker Change: Our average selling price, or ASB, increased 31% versus the prior year to approximately $54,000.
Speaker Change: Medicare Part B patients represented 59% of total revenue in first quarter, up from 57% of revenue in fourth quarter. Highlighting our continued success educating this patient population.
Speaker Change: Medicare Advantage Revenue was 17% of first quarter revenue, an increase of 18% year-over-year.
Speaker Change: Growth in Medicare Advantage Revenants is lagging, however, compared to Medicare as we continue to experience a high number of the Niles forcing us into an appeals process in order to serve these patients.
Speaker Change: 79% of our revenue in the first quarter came from the direct milling channel, compared to 59% in the prior year quarter, which was prior to the effective date of the Medicare fees.
Speaker Change: International revenue is 1.3 million in the first quarter, representing 13% of quarterly revenue, primarily from Germany. International revenues were up 42% year over year.
Speaker Change: As of March 31st, 2025, the pipeline stood at 1,482 patients in the increase of 33% year over year. In first quarter, we added 700 new patients to the pipeline, which was up 42% over the prior year quarter.
Speaker Change: While the pipeline, as we're a record, they were lower than we were planning, Gudon and Algorithm changed by meta at the beginning of the year, which impact lead generation for the first six weeks or so of the quarter.
Speaker Change: In our fourth quarter conference call, we noted an expectation for a higher cost per pipeline added in the first quarter. That expectation turned out to be correct, as cost per pipeline added was approximately $2,300 in the first quarter, which was up 31% year over year.
Speaker Change: 29% of first-order pipeline additions were Medicare Part B patients, and 17% of the quarter-end pipeline were Medicare Part B patients. [inaudible]
Speaker Change: This reflects the increased velocity in moving Medicare patients through the process of obtaining a myoperel as compared with pairs that require pre-authorizations.
Paul Gudonis: Paul mentioned earlier that a record number of leads in April to elaborate further on a per lead basis, the cost in April is roughly half of the per cost per lead or the per lead cost in January and February .
Paul Gudonis: If this continues, we expect our cost per pipeline ad will be lower in the second quarter compared to the first quarter.
Paul Gudonis: The backlog represents insurance authorizations in order to receive, but not yet converted to revenue.
Paul Gudonis: And in the case of Medicare Part B patients, those patients for whom we have collected medical records and being qualified for delivery based on our inclusion criteria.
Paul Gudonis: We ended the quarter with a backlog of 249 patients, a decrease of 9% versus the prior year.
Paul Gudonis: The decrease reflex reflects fewer pre-authorizations being provided by Medicare Advantage Plans and a back-end loading of the pipeline ads due to the meta-algorithm change resulting in fewer pipeline ads being converted to backlog.
Paul Gudonis: In addition, the velocity of revenue is increasing as a mix of Medicare revenue increases, resulting a less beginning backlog required for a given amount of forecast revenue.
Paul Gudonis: Contribute to our backlog, we've received 213 authorizations in order, first order in increase of 18% year-over-year.
Paul Gudonis: First margin for the first quarter of 2025 was 67.2% compared to 61.2% for the prior year quarter.
Paul Gudonis: The increase was driven primarily by a higher ASP, as first quarter 2024 ASP did not reflect the Medicare fees and also by higher fixed cost absorption.
Paul Gudonis: Total operating expenses for the first quarter of 2025 or 10.1 million, up 64% over a first quarter of 2024.
Paul Gudonis: This increase was driven primarily by higher headcount throughout the organization as we increase capacity, higher advertising spend, and higher R&D expenses.
Paul Gudonis: Growth in operating expenses reflects the planned investment of a portion of the proceeds from the December 2020 for offering.
Paul Gudonis: Advertising expense on the first quarter was 1.6 million, it increased 51% year-over-year.
Paul Gudonis: Operating loss for the first quarter of 2025 was 3.5 million, down 9% compared to the 3.9 million operating loss in the prior year quarter.
Paul Gudonis: Net loss for the first quarter of 2025 was 3.5 million, or 8 cents per share, is compared to the net loss of 3.8 million, or 10 cents per share, for the first quarter of 2024.
Paul Gudonis: As of March 31st, 2025, approximately 7.1 million pre-funded warrants are outstanding from our offerings in 2023 and January 2024. These pre-funded warrants are considered commonsoc equivalent under Gap and are included in our way with the average shares outstanding.
Paul Gudonis: However, approximately 1.5 million of those pre-funded warrants were exercised in April .
Paul Gudonis: Turning now for our balance sheeting cash flows, cash, cash equivalents, and short-term investment as a March 31st, 2025, or 21.5 million.
Paul Gudonis: In February , we entered into an amendment to our Line of Credit Facility with Silicon Valley Bank, in addition to changes to increase availability underlying, we also entered into a $3 million term loan facility, which can be drawn at any time until February 28th, 2026.
Paul Gudonis: Gas used for operations was 2.7 million in the first quarter and system with our clients to rampiring and our marketing spend to support growth in the direct million channel in 2025.
Paul Gudonis: We believe our cash and cash to close ones are sufficient, the funder operations for at least the next 12 months.
Paul Gudonis: Looking ahead, given our backlog entering second quarter and anticipated fill units, we expect second quarter revenue to be between 9 million and 9.5 million, up 20% to 26% year over year.
Paul Gudonis: For the full year, we continue to expect 2025 revenue to be in the range of 50 to 53 million representing growth of 54% to 66% over 2024.
Paul Gudonis: From a cash standpoint, we continue to expect negative cash flows through 3rd quarter of 2025.
Paul Gudonis: The second quarter being the highest burn quarter through the combination of incentive compensation payments and a higher expected operating loss as we continue to add capacity to support expected revenue growth in the second half of the year.
Paul Gudonis: We continue to expect to return the odds of the operating cash flow at 4th quarter 2025.
Paul Gudonis: With that financial overview, I'll turn the call back to Paul.
Paul Gudonis: I'm sorry. I'm sorry. I'm sorry. I'm sorry. I'm sorry.
Speaker Change: Thanks Dave. We're doing the rest of this year. We're going to continue to execute on what worked really well last year at a greater scale of the early lead generation issues are behind us.
Speaker Change: Our enhanced marketing now engages more patients, families and clinicians than ever before, revitalizing the funnel for myopro growth in our direct provider business while we build the own
Speaker Change: We also have a robust pride development program underway to build upon our personal revenge.
Speaker Change: We've encountered changes in the external environment in the past. We've successfully pivoted our operations.
Speaker Change: I look back and I see one COVID hit back in 2020. We had to pause manufacturing deliveries for two months.
Speaker Change: And then we introduced online patient screenings and the remote measurement kit and our revenues grew over 90% at year.
Speaker Change: And in 2021, Apple introduced changes in its iOS operating system to enhance privacy features regarding health information and after we changed our approach, once again, our revenues continue to grow.
Speaker Change: Another topic before I take your questions, and March, we hosted an all-employed event where our staff from around the world met in Burlington, our new offices to celebrate our success in 2024, tour the new facility, and learn and train together. During that event, with everyone assembled in one place, I was reminded of the incredible talent, knowledge, and passion we have in this company.
Speaker Change: In this capability of our teams working together toward our mission, executing a complex revenue cycle from lead generation to manufacturing, fitting and post delivery support is a major asset and competitive advantage for our company.
Speaker Change: I recently spoke with Sandra, a woman who suffered a stroke over 20 years ago, who told me about her excitement of having her myopropro proved by a major Medicare Advantage plan earlier this year, was a Blue Cross Blue Shield plan that is in the contracting process
Speaker Change: Daniel learned about the Myo Pro on Facebook, that you shared with me how the Myo Pro's enabled her to work at her job in a restaurant with both arms, perform household tasks independently, save money by eliminating the need for a home health aid, and perhaps most importantly, regain a sense of dignity.
Speaker Change: The story reflects the profound impact our technology has on people's lives and why we remain focused on our mission to restore independence for those living with upper limb paralysis.
Speaker Change: So if that update and overview of our plans for 2020-25, we're now ready to take your questions. I'll be right back.
Speaker Change: Thank you. We will now begin the question and answer session. To ask a question, you may press star then one on your touch tone phone. If you are using a speaker phone, please pick up your handset before pressing the keys. If at any time your question has been addressed and you would like to watch all your questions, please press star then two.
Speaker Change: Our first question will come from Chase Knickerbocker with Craig Allen, please go ahead.
Good afternoon, Paul Dette, thanks for
Taking my questions.
Speaker Change: Maybe just first, because you elaborate a little bit more on-
Speaker Change: The work around the meta issue that's driving that advertising efficiency improvements sequentially and how sustainable that you expect that improvement to be going forward as we think about Q3 and Q4 pipeline ads as well.
Speaker Change: Yes, thanks, Chase. Meta made some changes as they said in their algorithms to limit the amount of tracking that you can do where patients go and therefore be able to direct ads to the right individual. They're the target for a myoprom.
Speaker Change: So we work with our agency. We made some changes. I will tell you that I consider those proprietary because we're also competing with other healthcare providers for those same eyeballs and patients.
Speaker Change: But those worked very well. And as Dave said, we had a record number of leaves in April . And as long as that policy stays in place as it is, it should be sustainable. So that's our view as we continue to expect to hit our numbers for 2025.
Speaker Change: So that implies a, you know, called a cost for pipeline add-of.
Speaker Change: It's going to be a little bit the cost for pipe. I don't have to be $1,200. We'll see. I think the
Speaker Change: What I would say is that on a per-lead basis, the cost per-lead in April was half of what we saw in January and February .
Speaker Change: So I think more realistically, if we can kind of hold that, we were around 1,400 to 1,500 for 2024. I think that's what we would be looking to see.
Speaker Change: Got it, and the percentage of pipeline drops stepped up a little bit sequentially. Any drivers there to call out other than kind of normal seasonal dynamics with the Dr. Plymouth, that's not always seasonal, it's just typical patient dynamics.
Speaker Change: It's most of the time when a patient drops from the pipeline, it's because we can't get a whole of them in.
Speaker Change: Again, after the initial contact. That's usually the top of the parade, oh, it's, uh,
Speaker Change: Something we can't control, and then the other reasons would be insurance changes.
In Los Interest [inaudible]
Speaker Change: You know, those are other things that we see, also different changes with their health.
Speaker Change: when it comes to the backlog, the biggest, if there's a drop from the backlog.
Speaker Change: The biggest reason is the changing clinical presentation at the time of fitting and at that time we may find that the patient
Speaker Change: You know, it's not, you know, should not have a myopro at that time, and so we will then, you know, advise them to seek more therapy or something like that, and then try to deliver later.
Speaker Change: Got it, and then just last for me, as we think about kind of what Q2 guidance implies for a kind of second half revenue ramp, how should we be thinking about kind of cadence of revenue and Q3 and Q4s, we kind of adjust to this guidance, and it calls for a decent step-up and backlog.
Speaker Change: You know, kind of sequentially, but again, particularly in the back half, just speak to kind of the visibility that you have into those improvements in so far any way. Yeah, I mean, we are, you know,
Speaker Change: into one. It does me the means that the backlog needs to go up, but as I mentioned in my comments with Medicare being a larger portion of our revenue mix, we don't necessarily need
Um...
Speaker Change: There's high a backlog for a given revenue forecast because things are moving through the process faster.
And we've had now...
Speaker Change: A few quarters now of a high number of fill units, you know, said 81 fill units out of the...
Speaker Change: out of the 182. So, you know, 45% or so of our revenue units, where it came from...
Speaker Change: Authorizations and orders that were received inside the quarter. And so as long as the Medicare percentage of revenue stays where it is, I expect that the fill percentage will stay the same way.
Speaker Change: So long as we continue doing what we're trying to do, which is at that top of the funnel filled up.
Gar, thank you, Dave. Thanks, Paul.
Thanks, Chase.
Speaker Change: Our next question will come from Scott Henry with Alliance Global Partners. Please go ahead.
Scott Henry: Thank you and good afternoon. Just starting with the top of the funnel.
You have 700.
Scott Henry: Was a pretty good number. It was above the last two quarters, a record high. So if that was kind of an impaired number in January , February .
Scott Henry: You know, the implication would be, you know, 800 is probably right around the corner for a quarter and probably on its way to 900, you know, any thoughts on that?
Scott Henry: I think that you're thinking the way that we're thinking, Scott, you would mean it. If we're going to get to the kinds of revenues that we're looking to achieve, we obviously have to cross over a thousand at some point.
But I think your thinking is accurate. [inaudible]
Scott Henry: Yeah, that's a good observation. It was a record for pipeline ads.
Scott Henry: More of it came towards the back into the quarter as the leads increased the second half of the quarter.
Scott Henry: And as we've spoken before, it's about a four to six month revenue cycle from when we get a lead, we engage the person with our intake coordinators, then they have to go get their physicians order, the medical documents.
Scott Henry: and as Dave said, fortunately the Part B patients turn around faster, so that's why we're confident that the growth in the pipeline and the continued growth here in Q2, which enables to really accelerate revenue in the second half of the year.
Speaker Change: Okay, great. Thank you. And then one of the numbers that kind of jumped out at me and it may just be noise was the percent.
Speaker Change: Authorization, the percent of the pipeline that was authorized in the quarter, you know, that's the 213 over the 1482. It was about 14% conversion in this quarter, it's typically, you know, 17 or 18%.
Speaker Change: I mentioned the back-end loading of pipeline ads, if you will, which then they didn't have time to convert into authorizations and orders.
Speaker Change: and then also the pipeline is growing because more and more Medicare-advanced patients were having to fight.
Speaker Change: and so that's having that's having effect on that authorizationary as well. I mean, the
The first time authorization rate of Medicare Advantage is, you know,
Speaker Change: It used to be somewhere around the 30% range. We're not bouncing around probably less than half of that. That's just reflective of what Medicare advantage is doing and trying to manage utilization and yet.
Speaker Change: I mean, you saw, you know, UHC's first quarter results as an example. They're the largest Medicare advantage, of sure, and they had a crummy quarter, so that's, I think that's something that everybody who is, you know, everybody in healthcare, not just us, is doing well.
Speaker Change: Okay. Thank you for the color there. In the gross margins, how should we think about Q1 going forward? Is that 67 percent?
Speaker Change: Is that, or should we expect some expansion off that, particularly as we get in those second half numbers?
Speaker Change: Well, we did have some – remember, we did have some cost increases. You know, we had a full quarter of the rent in the new facility. Some of that is allocated to cost to good
We also have-
Speaker Change: Second quarter, I would expect always slightly lower gross margin just because the volume will be a bit lower in conjunction with the revenue guidance, but then I do believe that as we get into the second half of the year, we should be approaching 70% gross margins again.
Bye.
Speaker Change: And then I guess the final question, you know when it comes to your guidance for sort of the second half, 20, 25, you know when...
Speaker Change: When you run into issues in January February , it's not like you're inventorying those patients. You have to find new patients. So, the fact that you're maintaining your guidance for the year implies...
Speaker Change: Pretty good trends in the second half, better than you've had modeled before. I guess the question is, are you?
Speaker Change: What's your confidence level? Is it more of an optimistic number or do you think the trends are actually...
Speaker Change: You know, certainly the top of the funnel seems better than it has been in the past, just trying to get your sense on that. Thank you. I think we're, you know, we wouldn't have reiterated it if we weren't if we didn't think that the guidance was achievable.
Speaker Change: Looking back in history, just to a level said everyone is at the point back like last five years, for 40% or so, actually a little bit less, 40% of our...
Speaker Change: of our revenues, full-year revenues have come in the first half of the year, and 60% in the second half of the year. So there is already, sort of, that built-in...
Speaker Change: Cadence to the business, but then add to that the fact that we are
Speaker Change: What's already built into the business just based on the way it typically runs, plus what we're trying to do on top of that, I think that should give confidence to the fact that the guy before your numbers are still achievable.
Okay, great. Thank you for taking the questions.
Sure. All right. Scott?
Speaker Change: Our next question will come from Anthony Vendetti with Maxim Group. Please go ahead.
Anthony Venditti: Thank you. So I saw that you're up now at around 300 orthotists.
Anthony Venditti: And I guess, you know, how is that? Maybe explain to us how that's going to help drive your pipeline backlog and then
Anthony Venditti: And then if you could talk about the Myo Pro certification classes and also how that's going to be added if to the process.
Paul Gudonis: Well, thanks, Anthony. One of our big initiatives this year is to build this orthodox and prosthetics channel. You know, they're now interested because of the Medicare reimbursement.
Paul Gudonis: So, we have done the initial training, as I said, we've grown into now approximately 300 of these TPO's around the country different independent clinics at hangar clinical locations and so on and that enables them to start doing patient evaluations.
Now that we've watched the Myo Pro 2X,
Paul Gudonis: We're doing the in-depth certification classes. So for example, our team was in Georgia, Tennessee, and New Jersey this week, meeting with clinical practices. It's several days of hands-on training. They bring in their own patients.
Paul Gudonis: These patients get evaluated with Myopro, with the Mark units.
Paul Gudonis: as well. And then they go through the every-in-person process in the hands of the OMP clinic. So the certification classes have begun. We've got a busy roster over the next several months every week. We're out training more of these and what they're fully certified. Then they can really run on their own. Then they can go recruit their own patients, they can evaluate them, handle all the re-inversed paperwork and then place orders for the Myo Pro 2X.
Paul Gudonis: So that's been part of our plan to really build a robust distribution channel here. Now where we'll see the revenue growth in the second half of the year, just because they have that same revenue cycle timing that we do from the time to engage a patient to when they get the insurance authorization, they place the order, and then they can deliver the device to the patients.
Speaker Change: New Insurance Companies, Conversations with Employers, anything along those lines that you can update us on?
Speaker Change: Well, back at our March call, I mentioned that we had about 18 million lives, you know, under contract or pending, it's now up to 25 million.
So we've made...
Speaker Change: Five of us are those. We are limited by these contracts to make any type of public announcement of who they are.
Speaker Change: But then I can just say that most of them are a number of bodies.
Speaker Change: State Blue Cross Blue Shield Plans, and we're also in negotiations, discussions with several of the national plans. It takes a while. You have to get the meeting with the medical director, present the research, show them that Medicare covers this and further federal regulations.
Speaker Change: They have to offer their beneficiaries out like Medicare, like covers, and make those cases. We continue to take more and more of these cases to ALJ hearings.
Speaker Change: We're winning a higher percentage of those, and then that puts more pressure on these insurance companies to basically comply.
Speaker Change: with the federal regulations that they cannot just outright deny something that Medicare is already covering for the Part B Beneficiaries and
Speaker Change: It's been pretty widely reported in the press, the DOJ, the OIG, CMS, and even Congress is addressing this whole prior authorization issue if these insurance companies.
Speaker Change: As far as your question about employers, we really don't go directly to the employers. We do have a contract with one of the major workers compensation plans that works with employers, but other than that, we really work with the payers who then they have their contracts with the employers.
Speaker Change: Right, okay, great, but that seems like some significant covered lives that you've added.
Speaker Change: Yes, and as I mentioned, like Sandra, the woman I've talked to recently, you know, she's covered by one of these Blue Cross Blue Shield Plants, Medicare Advantage, that is now come along into contract with us.
Speaker Change: Okay, great. Thanks for that color. I appreciate it. I'll hop back into the cube.
Sean Lee: Our next question will come from Sean Lee with HC Rainwright. Please go ahead.
Sean Lee: Hi, good afternoon and thanks for taking my question. I just have one on the OMP channels. I think since it's been growing at a birth phase, I'm wondering if you can provide a bit more color on what are some of the pushes and polls we do consider in that channel and do expect this growth to continue to the second half of the year. Thanks.
Sean Lee: Well, for the own, the clinics, so this is the largest
What I call White Space Opportunity in the Olympian District.
Sean Lee: because overall this industry is a pretty slow growth industry, it used to be about one to three percent.
Sean Lee: and so the myoprobial with the chronic arm paralysis patient is a huge opportunity for them. There's good reimbursement, good margin for them, then it meets their clinical desire to improve patient's lives.
Sean Lee: So that's the upside to the clinics. On the other hand, just like other healthcare providers, they're busy. They're understaffed. They've got to take time out of their billable work.
Sean Lee: If you get all the certification training, but overall, it's a good investment and are up coming on investor analysts they, we hope to hear some testimonials from some of your own people and it's about how this is really important to their patients and their practice.
Great. Thank you.
Speaker Change: And our next question will come from Edward Woo with Acidian Capital. Please go ahead.
Edward Wu: Yeah, congratulations on the quarter. My question is on international. It looks like you're doing relatively well in Germany. Has there been any consideration to try to increase investments there to ramp it up as quickly as you are ramping up right now in the US?
Speaker Change: Thanks, yes, in fact, we are adding for a German team because that business has grown year over the year and you have pointed out.
Speaker Change: So we've added to the team, we're adding to our social media advertising there.
We're recruiting more own peak clinics attending more
Speaker Change: Conferences with neurologists and other clinicians. So, you know, weeks back another year of strong growth and profitability from that business out there in Germany. As for other international markets, you know, we get in-mounds.
from potential distributors in other countries.
Speaker Change: We look to see how committed they are, what the regulatory situation is, are they willing to make the investment to buy a startup kit and so on. So we are not aggressively pursuing that at this time. We have such a big opportunity both in the U.S. and Germany that those are our key markets right now.
Speaker Change: Great, thanks for answering my questions, and I wish you guys good luck. Thank you.
Thanks, Albert.
I'm sorry. I'm sorry. I'm sorry. I'm sorry. I'm sorry.
Speaker Change: This concludes our question and answer session. I would like to turn the conference back over to Paul Gudonis, Chief Executive Officer for any closing remarks.
Paul Gudonis: Thanks operator. Well, before we wrap up, I just want to remind everyone that we'll be hosting our first ever investor and analyst event
here on June 18th.
Paul Gudonis: which will be held at our new facility in Burlington, Massachusetts. We hope you'll join us to see our operations, meet members of our senior leadership team, and learn more about the MyoPro and the impact that myoma is having on patients.
Paul Gudonis: So if you'd like to attend, please register online or contact our CFO Dave Henry or Tirth Patel at Alliance Advisors IR who can reserve a spot for you and the event will also be available via webcast.
Paul Gudonis: We hope to see you then, and again, have a good evening, and look forward to speaking with you again in August , as well as during the June 18th Investor presentation. Thanks for now, good night.
Paul Gudonis: The conference is now concluded. Thank you for attending today's presentation. You may now disconnect.