MYOMO, INC. (MYO)·Q2 2025 Earnings Summary

Executive Summary

• Q2 revenue of $9.65M grew 28% YoY and modestly declined sequentially versus Q1; gross margin compressed to 62.7% amid higher materials and overhead .
• Revenue beat Wall Street consensus by ~5.5% ($9.65M vs. $9.15M), while EPS of $(0.11) missed the $(0.106) estimate; 5 estimates underpinned the consensus values. Bold: Revenue beat; EPS missed* [Values retrieved from S&P Global].
• Management cut FY25 revenue guidance to $40–$42M (from $50–$53M) and guided Q3 revenue to $9.5–$10.0M, citing weaker lead quality and conversion and reimbursement/operational headwinds—an explicit negative catalyst .
• Operating metrics were mixed: pipeline adds rose 49% YoY to 816 and total pipeline reached 1,611 (+37%), but authorizations/orders dipped 3% and backlog fell 18%; cost per pipeline add jumped 89% to $2,926 .
• Liquidity remains adequate (cash, equivalents and short-term investments of ~$15.5M), but Q2 cash burn was elevated; workforce reduced ~8% in July and spending cuts expected to save ≥$2M over the next 12 months .

What Went Well and What Went Wrong

What Went Well

• “Second quarter revenues exceeded our expectations with 28% growth as we further strengthened our ability to convert current quarter authorizations and orders into revenue.” — CEO Paul R. Gudonis .
• Pipeline expansion: 816 medically-qualified adds (+49% YoY) and total pipeline reached 1,611 (+37% YoY), showing sustained demand generation .
• Medicare Part B exposure continues to underpin revenue (56% of Q2 revenue), enabling higher velocity conversion (53% of revenue units came from intra-quarter authorizations/orders) .

What Went Wrong

• Gross margin contracted 810 bps YoY to 62.7% due to higher material and overhead spending; adjusted EBITDA worsened to $(4.0)M .
• Forward-looking metrics softened: authorizations/orders down 3%; backlog fell 18%, signaling near-term conversion challenges .
• Cost per direct-billing pipeline add surged 89% to $2,926 following a digital ad platform algorithm change; advertising spend rose 162% YoY to $2.2M .

Financial Results

Values marked with * retrieved from S&P Global.

Segment/Channel breakdown (Revenue):

Guidance Changes

Earnings Call Themes & Trends

Management Commentary

• “Second quarter revenues exceeded our expectations with 28% growth... However, several forward-looking operating metrics were not as strong as we anticipated due to factors affecting lead quality and pipeline conversion.” — Paul R. Gudonis, CEO .
• “We are shifting our advertising focus from digital advertising toward television... and using our clinical team to engage with therapists and physicians nationwide... we expect to secure additional patient referrals...” — Paul R. Gudonis .
• “Excluding non-recurring cash outflows, our normalized cash burn was $4.9 million in the second quarter, which is a close approximation of the total cash burn we expect in the second half of the year.” — David Henry, CFO .
• “We are updating our 2025 revenue guidance to a range of $40 million to $42 million... Revenue for the third quarter of 2025 is expected to be in the range of $9.5 million to $10.0 million.” — Paul R. Gudonis .

Q&A Highlights

Note: A Q2 2025 earnings call transcript was not available. Key themes from Q1 Q&A that informed Q2 outcomes:

• Advertising efficiency recovery after Meta algorithm changes; cost per lead in April ~half of Jan/Feb; expected pipeline adds improvement into Q2/Q3 .
• Authorization conversion dynamic: MA first-time authorization rates fell materially; growing pipeline with slower conversion contributed to lower authorization percentage .
• Gross margin trajectory: Expected dip in Q2 on lower volume; aim to approach ~70% in 2H 2025 .
• O&P channel progression: >300 CPOs trained; multi-day certifications; clinics building independent pipelines .
• International: Continued German expansion with added staffing and marketing .

Estimates Context

• Q2 revenue beat consensus by ~$0.51M (actual $9.65M vs. $9.15M estimate); EPS missed by ~$$0.004 (actual $(0.11) vs. $(0.106)). Five estimates supported each consensus.
• Given the FY25 guidance cut to $40–$42M and gross margin compression, Street models likely need to revise 2H revenue and margin trajectories downward and reflect elevated OpEx and cash burn*.
  Values marked with * retrieved from S&P Global.

Key Takeaways for Investors

• Revenue resilience amid conversion friction: Q2 revenue beat consensus and prior guidance, supported by Medicare Part B velocity; however, operational metrics signal near-term growth pressure .
• Material guidance reset: FY25 lowered to $40–$42M and Q3 guided to $9.5–$10.0M—expect negative estimate revisions and potential stock pressure near term .
• Margin headwinds: Gross margin down 810 bps YoY on materials/overhead; watch for 2H volume recovery and cost actions to stabilize margins .
• Marketing pivot & pipeline quality: Shift to TV and clinical outreach aims to improve lead quality and conversion; monitor pipeline add efficiency and backlog rebuild .
• Reimbursement dynamics: MA utilization management and DME MAC audit processes remain headwinds but operationally manageable; payment hold resolved .
• Liquidity adequate but burn high: ~$15.5M cash+STI at quarter-end, with borrowing facilities; workforce reduction and spend cuts expected to save ≥$2M over 12 months .
• Medium-term thesis: O&P channel training/certification and MyoPro 2x enhancements support broader adoption and 2H revenue potential; execution on conversion and margin critical .