Q1 2024 Summary
Published Jan 16, 2025, 9:08 AM UTC- Myomo expects to generate in excess of $5 million of revenue in the second quarter of 2024, up from $3.8 million in the first quarter, indicating strong growth momentum.
- The company is doubling its manufacturing capacity from 40-50 units per month to 80-100 units per month by the fourth quarter of 2024, positioning itself to meet increasing demand and potentially reach $10 million in quarterly revenue.
- The addressable market has significantly expanded with the ability to serve Medicare Part B patients, who make up approximately half of seniors, and with two-thirds of strokes occurring in those aged 65 and older. This expansion is expected to improve pipeline quality and increase conversion rates, driving future revenue growth.
- Challenges in receiving full payments from CMS may affect cash flow: The company experienced underpayments from CMS in the first quarter and acknowledges that recovering these additional payments "could be a bit of a slog". This suggests potential delays or difficulties in receiving expected revenues from Medicare reimbursements.
- Manufacturing capacity constraints may hinder growth: Myomo plans to double its production capacity from 40-50 units per month to 80-100 units per month by Q3/Q4. However, they are "looking at other sites" to expand manufacturing , indicating potential challenges in scaling up production in time to meet increased demand.
- Dependence on hiring qualified staff to meet growth targets: The company aims to hire 50-60 people in 2024 to expand clinical, reimbursement, and manufacturing capacity but has only hired approximately 20 professionals by March 31. Failure to reach the hiring target could impede their ability to "double our MyoPro output in the second half of the year".
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Revenue Guidance
Q: Will you meet the $28–$30M guidance despite Q1 being light?
A: Yes, we believe revenue will materialize in the second quarter and remain confident in our pipeline for the rest of the year. Some expected Q1 revenue shifted to Q2, and those should come through.
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Gross Margin Outlook
Q: Where do you see gross margins heading in the future?
A: Long-term, we expect gross margins to reach 70%. While Q2 margins might see pressure due to timing differences with Medicare payments, this should correct later in the year as we establish sufficient collection history.
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Average Selling Price Increase
Q: Will average selling prices rise with higher Medicare rates?
A: Yes, the allowable for our top-selling product is nearly $66,000, with Medicare paying 80%. We're receiving about $50,000–$51,000 per unit from Medicare, up from our average ASP of $42,000. As Medicare becomes a larger revenue share, we expect ASPs to reach the mid- to high $40,000s.
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Expanded Addressable Market
Q: How has serving Medicare Part B patients impacted your market?
A: By serving Medicare Part B patients, our addressable market has significantly increased. Half of seniors are on Part B, and two-thirds of strokes occur in those aged 65 and older, effectively doubling our market.
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Manufacturing Capacity Expansion
Q: What are your plans to increase manufacturing capacity?
A: We're doubling capacity from 40–50 units per month to 80–100 units per month by Q4. We're hiring and training staff, expanding our facilities, and ensuring suppliers can handle increased volume to meet growing demand.
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Pipeline Adds Sustainability
Q: Is the high number of pipeline adds sustainable?
A: Yes, we expect pipeline growth to continue as we add capacity and engage patients we previously couldn't serve. Without increasing advertising spend, we're leveraging existing leads, particularly Medicare Part B patients, reducing our cost per pipeline add.
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Sales Cycle Compression
Q: Will more Medicare patients shorten the sales cycle?
A: Yes, Medicare Part B patients move through the pipeline faster since there's no need for preauthorization, eliminating delays of up to 180 days. This compresses the revenue cycle and improves pipeline quality by reducing dropout risks.
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Reengaging Past Medicare Patients
Q: Are you reaching out to previous Medicare Part B leads?
A: Yes, we're contacting eligible patients within Medicare's 15-month window, adding staff to reach all potential candidates. This should increase our pipeline over time.
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U.S. O&P Channel Growth
Q: What's the growth potential of the U.S. O&P channel?
A: It could become a significant, possibly majority, part of our business over time. We're expanding our network by certifying more clinicians and expect the O&P channel to contribute more significantly later this year and beyond.
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International Growth in Germany
Q: How is your international growth, especially in Germany?
A: Germany is our best international market, accounting for 25% of revenue in Q1. We've built a network of over 100 O&P partners. Given Germany's size, the market could reach 20–25% of our U.S. expectations.
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Product Mix Stability
Q: Has product mix changed with more Medicare patients?
A: No, the product mix remains consistent, with 90–95% of sales being the Motion G device. This is not significantly affected by the type of Medicare coverage.