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MI

MYOMO, INC. (MYO)·Q3 2025 Earnings Summary

Executive Summary

  • Q3 revenue of $10.09M came in at the high end of guidance and above S&P Global consensus*, with EPS also ahead of expectations*. Management reiterated FY25 revenue guidance of $40–$42M and highlighted improving operating leverage (OpEx down 6% sequentially) . Values retrieved from S&P Global*.
  • Mix shifts and cost inflation pressured gross margin year over year (63.8% vs. 75.4%), though margin improved sequentially (63.8% vs. 62.7% in Q2). Management cited lower ASP vs. atypically high prior-year levels, higher materials/payroll/lease costs, and unfavorable overhead absorption as key drivers .
  • Growth engines: record international revenue ($1.8M, +63% YoY), record O&P channel revenue ($0.9M, +154% YoY), and stronger intra-quarter conversions (57% of revenue units from Q3 authorizations/orders) supported results; 229 authorizations and orders marked the strongest quarter of the year .
  • Liquidity strengthened via a new Avenue Capital term loan (committed up to $17.5M; $12.5M funded; interest-only 18 months; maturity 2029) and pro forma cash of $20.1M at 9/30/25. Covenants include minimum $2.5M unrestricted cash and revenue/cash-burn tests .

What Went Well and What Went Wrong

  • What Went Well

    • Strong top-line and conversions: “Revenue…at the high end of our expectations…intra-quarter orders represented 57% of revenue units” .
    • Channel diversification gaining traction: “record U.S. O&P and International revenue,” with O&P revenue up 154% YoY to $0.9M and International a record $1.8M (+63% YoY) .
    • Cost discipline: Operating expenses declined 6% sequentially; marketing changes lowered cost per pipeline add 5% sequentially to $2,589 . CEO: “reflecting our focus on improving operating leverage” .

  • What Went Wrong

    • Margin compression: Gross margin fell to 63.8% from 75.4% a year ago on lower ASP vs. atypically high prior-year, higher material/payroll/lease costs, and lower overhead absorption; labor/overhead and absorption impacted GM by ~800 bps YoY .
    • Medicare Advantage headwinds: MA revenue was 18% of Q3 revenue, down 18% YoY due to high pre-authorization denials forcing appeals (45–50% typical overturn rate for engaged patients) .
    • Backlog normalization: Backlog ended at 208 patients (down 34% YoY), partly due to higher intra-quarter fills and a Germany backlog cleanup, increasing dependence on in-quarter authorizations/orders .

Financial Results

Overall P&L (oldest → newest)

MetricQ3 2024Q1 2025Q2 2025Q3 2025
Revenue ($)9,207,586 9,831,814 9,652,234 10,090,699
Gross Margin %75.4% 67.2% 62.7% 63.8%
Operating Expenses ($)7,903,108 10,129,884 10,642,493 9,959,762
Operating Income (Loss) ($)(957,553) (3,520,254) (4,590,320) (3,517,514)
Net Income (Loss) ($)(966,409) (3,465,058) (4,631,972) (3,662,915)
Diluted EPS ($)(0.03) (0.08) (0.11) (0.09)

KPI and mix detail (quarterly)

KPI/MixQ1 2025Q2 2025Q3 2025
Revenue Units (devices)182 178 186
ASP (approx, $)~54,000 ~54,200 ~54,200
Intra-quarter Fill (% of units)45% 53% 57%
Authorizations & Orders (units)213 207 229
Pipeline Adds (medically qualified)700 816 826
Pipeline Size (end of period, patients)1,482 1,611 1,669
Backlog (end of period, patients)249 230 208
Medicare Part B (% of revenue)59% 56% 54%
Medicare Advantage (% of revenue)——18% (down 18% YoY)
Direct Billing (% of revenue)——73% (vs. 81% PY)
International Revenue ($, % of total)——$1.8M, 18%
O&P Channel Revenue ($, % of total)——$0.9M, 9%
Cost per Pipeline Add ($)2,300 2,926 2,589 (−5% q/q)

Estimate context (Q3 2025)

MetricActualConsensus*Beat/Miss
Revenue ($)10,090,699 9,438,000*Beat*
EPS ($)(0.09) (0.108)*Beat*

Values retrieved from S&P Global*.

Liquidity and financing

  • Cash, cash equivalents and short-term investments were $12.6M at 9/30/25; pro forma for the Avenue facility funding net of repayments/fees, cash was $20.1M .
  • New term loan facility with Avenue: $17.5M committed, $12.5M funded at close; interest rate = WSJ Prime + 4.75% (with floor), interest-only 18 months, maturity June 1, 2029; covenants include minimum $2.5M cash and revenue/cash-burn tests; warrants and limited conversion features included .

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Revenue ($)FY 2025$50–$53M (Q1 guide) $40–$42M (updated Q2; reiterated Q3) Lowered in Q2; maintained in Q3
Revenue ($)Q3 2025$9.5–$10.0M (Q2 guide) Actual $10.09M Above guide
Gross Margin (bps)Starting Q3 2026—+200 bps from cost reduction projects (aggregate) New multi-project savings outlook

Earnings Call Themes & Trends

TopicPrevious Mentions (Q1, Q2)Current Period (Q3)Trend
Patient acquisition & marketing efficiencyQ1: cost/lead up on social algorithm changes; pipeline adds rebounded Mar/Apr . Q2: shift mix from digital to TV; cost per direct billing pipeline add spiked; quality issues; workforce reduction to align OpEx .Q3: TV shift and MyoConnect reduced cost per pipeline add −5% q/q; new head of marketing; focus on clinician referrals to boost quality and lower CAC .Improving quality; lowering CAC
O&P channel build-outQ1: >300 CPO initial training . Q2: O&P enablement, training, backlog impacted by higher velocity .Q3: Record O&P revenue $0.9M (+154% YoY), ~30 units; expanding U.S. partner engagement; Germany O&P network strong .Accelerating
International (Germany)Q2: statutory insurer coverage supportive; backlog dynamics .Q3: Record $1.8M (+63% YoY); Germany backlog cleanup drove part of backlog drop .Strong growth; cleaner funnel
Payer dynamics (MA vs Medicare)Q1: CMS fee schedule (April 2024) expanded Medicare B; MA utilization management persisted . Q2: MAC audits impacted cash timing; quality conversion issues .Q3: MA at 18% of revenue (−18% YoY) amid denials; 45–50% appeal overturn rates; possible mix tailwind as some MA members return to fee-for-service Medicare .Headwind persists; potential mix benefit
Gross margin driversQ2: GM 62.7%; higher materials/overhead .Q3: GM 63.8%; YoY pressure from ASP mix, higher costs, overhead absorption; multi-year cost reduction projects targeting +200 bps by Q3’26 .Sequentially better; structural savings underway
Product & R&DQ1: launch prep/training; MyoPro 2x announced Apr 30 . Q2: R&D increased; quality of leads impacted .Q3: MyConfig mobile app, MyoPro 3 development; randomized control trial pilot (Univ. of Utah) .Continued investment
Profitability pathway & leverageQ1: aiming positive quarterly operating cash flow by Q4’25 . Q2: workforce reduction to improve leverage .Q3: breakeven revenue run-rate now ~$16–$17M/quarter post July headcount actions; 2026 focus on lower cash burn .Clearer path; requires scale

Management Commentary

  • “Third quarter revenues were at the high end of our expectations, with International and U.S. O&P revenues at record levels…operating expenses decreased on a sequential basis, reflecting our focus on improving operating leverage” (Paul Gudonis, CEO) .
  • “We believe the key to lowering cost per pipeline add is strengthening relationships with the therapists and physicians…Under…MyoConnect…expected to generate recurring patient referrals” .
  • “International revenue was a record $1.8 million…up 63%…O&P…a quarterly record at $900,000, up 154% year-over-year” (Dave Henry, CFO) .
  • “The higher labor and overhead spending and change in absorption impacted gross margin by approximately 800 basis points” (CFO) .
  • “Pro forma…cash balance was $20.1 million as of September 30, 2025” (facility-funded) .
  • “Around $16–$17 million [quarterly revenue]” needed to reach breakeven after July headcount reduction (CFO) .

Q&A Highlights

  • O&P scaling: ~$900k revenue in Q3, “roughly 30 units” shipped; building certification and training programs across major groups (Hanger, Ottobock, Össur) .
  • Backlog behavior: Lower backlog (208) reflects faster intra-quarter conversions and a Germany backlog cleanup (~40% of drops) .
  • Advertising and CAC: Shift to TV and MyoConnect to improve lead quality and conversion; plan to spend more on ads in 2026 but at a slower growth rate vs. 2025 .
  • Debt vs equity rationale: 18 months interest-only viewed as sufficient runway toward breakeven; preference for less dilutive capital .
  • International outlook: Germany strong with broad statutory coverage; minimal spend pursuing new country reimbursement until later; China JV progressing clinical work toward NMPA approval .

Estimates Context

  • Q3 2025: Revenue $10.09M vs. $9.44M consensus*; EPS $(0.09) vs. $(0.108) consensus* — both beats. FY25 consensus revenue is $40.11M*, within reiterated guidance ($40–$42M). Next quarter (Q4 2025) consensus revenue is $10.86M*, EPS $(0.0825)* . Values retrieved from S&P Global*.
  • Implications: Consensus likely nudges up on the quarter’s beat, but margin commentary and MA headwinds may limit EPS revisions until evidence of sustained gross margin recovery and conversion improvements (MyoConnect/O&P) materialize .

Key Takeaways for Investors

  • Beat-and-maintain print: Above-consensus revenue and EPS* with reiterated FY guide signals execution on conversions and channel diversification . Values retrieved from S&P Global*.
  • Mix positive, margin watch: International and O&P contributions are rising, but gross margin remains below prior-year levels; management outlined concrete cost levers (+200 bps savings by Q3’26) .
  • Conversion velocity rising: 57% intra-quarter fills reduce dependence on backlog and improve revenue visibility within-quarter .
  • Payer risk persists: Medicare Advantage denials remain a drag; potential tailwind if MA members revert to fee-for-service Medicare coverage .
  • Liquidity de-risked: Avenue facility extends runway; covenants (min cash and performance tests) warrant monitoring as growth investments continue .
  • 2026 focus: Scaling MyoConnect and O&P, plus operating leverage, are key to approaching the ~$16–$17M revenue/quarter breakeven threshold (watch demand trajectory and CAC) .
  • Trading setup: Near-term catalysts include sustained intra-quarter fill rates, MA authorization improvements, O&P partner ramp, and gross margin progress; missteps on payer approvals or margin recapture could pressure the multiple .

Appendix: Source Documents and Data Notes

  • Q3 2025 press release with full financials and operating metrics .
  • Q3 2025 earnings call transcript for qualitative insights, mix detail, and KPI elaboration .
  • Q2 2025 press release for sequential comparisons and revised FY guide .
  • Q1 2025 press release for earlier-quarter trend context and initial FY guide .
  • 8-K for Avenue Capital term loan facility terms and covenants .

Estimates marked with * are from S&P Global. Values retrieved from S&P Global*.