Q4 2023 Summary
Published Jan 16, 2025, 9:08 AM UTC- The company's addressable market has effectively doubled with the inclusion of Medicare Part B patients due to newly finalized Medicare reimbursement rates, significantly expanding potential revenues.
- The company is anticipating substantial revenue growth in 2024, with guidance of $28 million to $30 million in revenue (a 46% to 56% increase over 2023), and the potential to achieve cash flow breakeven by Q4 2024.
- The expansion of distribution channels through orthotics and prosthetics (O&P) clinics, enabled by the new Medicare reimbursement, opens up potential access to a wider patient base through 3,000 O&P clinics in the U.S., representing a significant growth opportunity.
- Operational Challenges in Scaling Up Capacity: The company plans to double its capacity by hiring 50 to 60 new employees to meet its 2024 revenue guidance of $28 million to $30 million ,. There may be potential limitations or roadblocks in scaling up manufacturing and operational capacity within the expected timeline, which could pose risks to achieving their revenue and profitability targets.
- Dependence on Medicare Part B Reimbursement: A significant portion of the company's anticipated growth is dependent on serving Medicare Part B patients, effectively doubling their addressable market. There are risks associated with delays or uncertainties in Medicare reimbursements, as revenues for Medicare patients will be reported at the time of payment until sufficient collection history is established. This could impact cash flow and revenue recognition in the near term.
- Potential Overreliance on a Single International Market: The company reported that 23% of fourth-quarter revenue came from international locations, primarily Germany. By focusing primarily on Germany and doubling down on this market , the company may be exposed to country-specific risks and overreliance on a single international market for growth.
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Cash Flow Breakeven and Gross Margin Outlook
Q: Will gross margins exceed 70% by year-end?
A: Management anticipates that with volume increases and opportunities to raise average selling prices due to Medicare fees, gross margins could exceed 70% in the fourth quarter. They expect to achieve cash flow breakeven by Q4, under their current assumptions. -
Doubling Manufacturing Capacity
Q: How will you double manufacturing capacity to meet 2024 guidance?
A: The company is expanding its Boston facility by adding workstations and training staff to double output between now and the second half of the year. They've hired an experienced manufacturing executive, Colin Anderson, and are looking at expanded facilities to meet the large market opportunity. -
Hiring Plans and Headcount Growth
Q: Where are the 50–60 new employees being added?
A: Most new hires will be in field operations and manufacturing, including call center staff, customer experience, intake coordinators, certified prosthetists, manufacturing inspection, and clinical specialists. Only a few will be on the reimbursement side as patient navigators. -
Impact of Medicare Part B on Second Half Ramp
Q: Is the second half ramp driven largely by Medicare Part B?
A: Yes, the additional volume will come from Medicare Part B patients, effectively doubling the addressable market. Growth will also continue in Medicare Advantage, commercial plans, and international markets. -
International Revenue Growth
Q: Do you anticipate international revenue being 23% or higher going forward?
A: International revenue accounted for 23% of Q4 revenue, primarily from Germany. Management expects international revenue growth to continue into 2024. -
Focus on German Market
Q: Is growth mainly from Germany, or will you expand elsewhere in Europe?
A: Growth is primarily in Germany, where they've built a strong business with over 100 orthotics and prosthetics clinics recruited. Due to good reimbursement progress and market size, they are doubling down in Germany before considering other markets. -
Expansion of O&P Channel
Q: How are O&P clinics responding to Medicare reimbursement changes?
A: O&P clinics are well-positioned to provide MyoPro to patients now that reimbursement barriers have eased. With approximately 3,000 clinics nationwide, they already see stroke patients needing orthoses, making it natural to identify candidates for MyoPro. Clinics view this as the largest growth opportunity in their field. -
MyoPro Centers of Excellence
Q: What does becoming a MyoPro Center of Excellence entail?
A: O&P clinics undergo clinical training by Myomo staff, assisting with evaluation and fitting of initial patients. Once certified, they become Centers of Excellence and can start fitting patients, potentially receiving referrals. Hiring includes O&P channel managers and expanding clinical training staff to support this program. -
Q1 Guidance and Shipment Timing
Q: Is Q1 guidance affected by timing of shipments to Medicare patients?
A: Yes, shipments to Medicare patients are aligned with reimbursement being set, possibly shifting some deliveries from the last week of March to the first week of April. This timing impacts Q1 guidance.