News Press Releases

Myomo Reports 2019 Fourth Quarter and Full Year Financial Results Featuring Record Revenue and Gross Margins

MYO | March 12, 2020

CAMBRIDGE, Mass.

Direct Billing Represents 50% of Fourth Quarter Revenue

Myomo, Inc. (NYSE American: MYO) (“Myomo” or the “Company”), a wearable medical robotics company that offers increased functionality for those suffering from neurological disorders and upper-limb paralysis, today announced financial results for the fourth quarter and year ended December 31, 2019.

Financial and operational highlights include:

Revenue for the fourth quarter was $1.5 million, up 71% compared with $0.9 million for the prior year quarter. Revenue for 2019 was $3.8 million, up 57% over 2018.
Revenue from direct billing for the fourth quarter was 50% of total revenue, compared with 23% of total revenue in the prior year. Direct billing channel revenue for 2019 was 33% of total revenue, compared with 15% of total revenue for 2018.
Gross margin for the fourth quarter increased 590 basis points to 80.5% from 74.6% in the prior year. Gross margin for 2019 was 76.1%, compared with 70.2% for 2018.
The Company’s reimbursement pipeline contained 594 MyoPro units as of December 31, 2019, up 12% from 528 units as of September 30, 2019. The net increase was driven by 193 additions in the fourth quarter of 2019.
At the end of the fourth quarter there were 331 direct billing units, or 56% of the MyoPro pipeline; 81% of the new candidates entering the pipeline in the fourth quarter are to be directly billed to insurance payers.
Backlog, which represents insurance authorizations received, but not converted to revenue, was 53 units as of December 31, 2019, compared with 61 units as of September 30, 2019. More than 40% of the ending third quarter backlog was converted into revenue in the fourth quarter.
In February 2020, the Company announced that Statutory Health Insurance in Germany will reimburse the MyoPro on a case-by-case basis.
In February 2020, the Company announced that it joined HOMELINK’s billing network, which allows the Company to bill claims that would otherwise be out-of-network to the 1,200 payers in its network.
In February 2020, the Company raised net proceeds of approximately $13.7 million in a $15.0 million underwritten public offering of common stock and warrants. The proceeds are being used for the repayment of 50% of the outstanding balance of its $3.3 million term loan with Chicago Venture Partners working capital and other general corporate purposes.

Management commentary

“The strategic actions we have taken over the last 18 months -– digital B2C marketing directly to patients, adding the Direct Billing channel in addition to distribution via orthotics and prosthetics providers, and product cost reductions -- have led to strong revenue growth and expansion of product margins,” said Paul R. Gudonis, chairman and chief executive officer. “We enter the new year with a record number of MyoPro units in the reimbursement pipeline, with a growing share of these opportunities in our Direct Billing channel, which offers us higher revenue and margin per unit.”

Financial results

	For the three months ended December 31,						Period-to-Period Change				For the year ended December 31,						Period-to-Period Change
	2019			2018			$		%		2019			2018			$		%
Revenue	$	1,520,695		$	889,575		$	631,120	71	%	$	3,837,730		$	2,444,104		$	1,393,626	57	%
Cost of revenue		296,385			226,176			70,209	31	%		917,623			728,279			189,344	26	%
Gross profit	$	1,224,310		$	663,399		$	560,911	85	%	$	2,920,107		$	1,715,825		$	1,204,282	70	%
Gross margin		80.5	%		74.6	%			6	%		76.1	%		70.2	%			6	%

Revenue in the fourth quarter of 2019 was $1.5 million, an increase of 71% compared with the fourth quarter of 2018. Revenue for 2019 was $3.8 million, an increase of 57% over 2018. Both fourth quarter and full year 2019 revenue growth was achieved through a combination of a higher number of revenue units and a higher average selling price, which reflected the record amount of direct billing revenues.

Gross margin for the fourth quarter of 2019 was 80.5%, compared with 74.6% for fourth quarter of 2019. Gross margin for 2019 increased to 76.1% from 70.2% in 2018. The fourth quarter and full year gains were driven by increases in higher-margin direct billing revenues and realized cost reductions on the MyoPro.

Operating expenses for the fourth quarter of 2019 were $3.8 million, an increase of 12% over the fourth quarter of 2018. Operating expenses for 2019 were $13.7 million, an increase of 11% over 2018. The increases primarily reflect higher compensation costs associated with the addition of sales and reimbursement personnel, as well as higher expenses associated with marketing, product development and securing reimbursement.

The Company’s operating loss for the fourth quarter of 2019 decreased to $2.6 million from $2.7 million in the fourth quarter of 2018. The full year 2019 operating loss of $10.8 million increased from $10.5 million in 2018.

The Company’s net loss for the fourth quarter of 2019 was $2.8 million, or a loss of $4.81 per share, compared with a net loss of $2.7 million, or a loss of $6.49 per share, for the same period of 2018. Net loss for 2019 was $10.7 million, or a loss of $19.35 per share, compared with a net loss of $10.3 million, or a loss of $25.18 per share, for 2018. Share and per-share amounts have been restated to reflect the Company’s 1-for-30 reverse stock split effected on January 30, 2020.

Adjusted EBITDA1 for the fourth quarter of 2019 improved to a negative $2.4 million, compared with a negative $2.5 million for the fourth quarter of 2018. Adjusted EBITDA for the full year 2019 was a negative a $9.8 million, compared with a negative $9.6 million for 2018. A reconciliation of GAAP net loss to this non-GAAP financial measure appears below.

Financial Outlook

“Our financial results for the fourth quarter reflect the important steps we have taken to bring MyoPro to more patients as the only option to improve their upper-extremity functionality and quality of life. Our revenues, stimulated by our new, high-margin, direct-billing channel, grew dramatically,” added Mr. Gudonis. “Building on this momentum, we expect to achieve significant revenue growth in 2020 due to the size of the reimbursement pipeline and the growing number of new patient leads we are generating. However, as we typically experience, first quarter 2020 revenue is expected to be lower sequentially and similar to the first quarter of 2019 due to a lower backlog conversion rate in the quarter. Our longer-term target is to reach cash flow breakeven on a quarterly basis by the fourth quarter of 2021.”

Liquidity

Cash and cash equivalents as of December 31, 2019 were $4.5 million. Pro forma for the proceeds from the February 2020 underwritten public offering and net of repaying 50% of the outstanding balance of the term loan, the Company’s cash balance as of December 31, 2019 was $16.2 million. Cash burn was $2.7 million in the fourth quarter. The Company believes it has sufficient cash to meet its operating requirements for at least the next 12 months.

Conference Call and Webcast Information

Myomo will hold a conference call today at 4:15 p.m. ET. To access the conference call, please dial 1-844-707-6932 (U.S.) or 1-412-317-9250 (International). A webcast of the call can also be accessed at Myomo’s Investor Relations page at http://ir.myomo.com/.

A replay of the webcast will be available approximately one hour after completion of the live conference call at the Investor Relations page at http://ir.myomo.com/. A dial-in replay of the call will be available until March 26, 2020; please dial 1-877-344-7529 (U.S.) or 1-412-317-0088 (International) and provide the passcode #10139933.

Non-GAAP Financial Measures

Myomo has provided in this press release financial information that has not been prepared in accordance with generally accepted accounting principles in the United States, or GAAP. This information includes Adjusted EBITDA. This non-GAAP financial measure is not in accordance with, or an alternative for, GAAP and may be different from similar non-GAAP financial measures used by other companies. Myomo believes that the use of this non-GAAP financial measure provides supplementary information for investors to use in evaluating operating performance and in comparing Myomo’s financial measures with other companies in its industry, many of which present similar non-GAAP financial measures. Adjusted EBITDA is EBITDA adjusted for stock-based compensation expense and the impact of the fair value revaluation of derivative liabilities. This non-GAAP financial measure is not meant to be considered superior to or a substitute for results of operations prepared in accordance with GAAP, and should be viewed in conjunction with GAAP financial measures. Investors are encouraged to review the reconciliation of this non-GAAP measure to its most directly comparable GAAP financial measure. A reconciliation of GAAP to the non-GAAP financial measures has been provided in the tables included as part of this press release.

About Myomo

Myomo, Inc. is a wearable medical robotics company that offers improved arm and hand function for those suffering from neurological disorders and upper-limb paralysis. Myomo develops and markets the MyoPro product line. MyoPro is a powered upper-limb orthosis designed to support the arm and restore function to the weakened or paralyzed arms of certain patients suffering from CVA stroke, brachial plexus injury, traumatic brain or spinal cord injury, ALS or other neuromuscular disease or injury. It is currently the only marketed device that, sensing a patient’s own EMG signals through non-invasive sensors on the arm, can restore an individual’s ability to perform activities of daily living, including feeding themselves, carrying objects and doing household tasks. Many are able to return to work, live independently and reduce their cost of care. Myomo is headquartered in Cambridge, Massachusetts, with sales and clinical professionals across the U.S. and representatives internationally. For more information, please visit www.myomo.com.

Forward-Looking Statements

This press release contains forward-looking statements regarding the Company’s future business expectations, including the receipt of revenues from units being processed for insurance reimbursement, the scale-up and expansion of commercial operations, our expectations for revenues and our results of operations, and the potential benefits to users of our products, our financial position and results of operations, including the target to achieve cash flow breakeven by the fourth quarter of 2021 and cash runway, which are subject to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are only predictions and may differ materially from actual results due to a variety of factors.

These factors include, among other things:

our sales and commercialization efforts;
our ability to achieve reimbursement from third-party payers for our products;
our dependence upon external sources for the financing of our operations, to the extent that we do not achieve or maintain cash flow breakeven;
our ability to effectively execute our business plan and scale up our operations;
our expectations as to our development programs and;
general market, economic, environmental and social factors that may affect the evaluation, fitting, delivery and sale of our products to patients.

More information about these and other factors that potentially could affect our financial results is included in Myomo’s filings with the Securities and Exchange Commission, including those contained in the risk factors section of the Company’s annual report on Form 10-K, quarterly reports on Form 10-Q and other filings with the Commission. The Company cautions readers not to place undue reliance on any such forward-looking statements, which speak only as of the date made. Although the forward-looking statements in this release of financial information are based on our beliefs, assumptions and expectations, taking into account all information currently available to us, we cannot guarantee future transactions, results, performance, achievements or outcomes. No assurance can be made to any investor by anyone that the expectations reflected in our forward-looking statements will be attained, or that deviations from them will not be material and adverse. The Company disclaims any obligation subsequently to revise any forward-looking statements to reflect events or circumstances after the date of such statements or to reflect the occurrence of anticipated or unanticipated events.

MYOMO, INC.
CONDENSED STATEMENTS OF OPERATIONS

	(unaudited)
	Three months ended				Year ended
	December 31,				December 31,
		2019		2018		2019		2018
Revenue	$	1,520,695	$	889,575	$	3,837,730	$	2,444,104

Cost of revenue		296,385		226,176		917,623		728,279

Gross profit		1,224,310		663,399		2,920,107		1,715,825

Operating expenses:
Research and development		544,757		529,619		2,160,588		1,838,633
Selling, general and administrative		3,260,369		2,868,807		11,554,522		10,405,609

Total operating expenses		3,805,126		3,398,426		13,715,110		12,244,242

Loss from operations		(2,580,816)		(2,735,027)		(10,795,003)		(10,528,417)

Other expense (income)
Change in fair value of derivative liabilities		(38,530)		(4,991)		(194,485)		(36,269)
Interest (income) and other expense, net		105,587		(38,082)		(1,140)		(175,409)
Non-cash interest expense		113,631		-		113,631		-
Total other expense (income)		180,688		(43,073)		(81,994)		(211,678)

Net loss	$	(2,761,504)	$	(2,691,954)	$	(10,713,009)	$	(10,316,739)
Weighted average number of common shares outstanding: (1)
Basic and diluted		574,299		414,526		553,782		409,746

Net loss per share: (1)
Basic and diluted	$	(4.81)	$	(6.49)	$	(19.35)	$	(25.18)

(1) Share and per share amounts have been restated to give effect to the Company's 1-for-30 reverse stock split effected January 30, 2020

MYOMO, INC.
CONDENSED BALANCE SHEETS


		December 31, 2019		December 31, 2018
ASSETS
Current Assets:
Cash and cash equivalents	$	4,465,455	$	6,540,794
Accounts receivable, net		424,287		382,258
Inventories, net		439,533		256,149
Prepaid expenses and other		820,206		695,276
Total Current Assets		6,149,481		7,874,477
Restricted cash		75,000		75,000
Deferred offering costs		219,240		144,582
Equipment, net		154,972		187,513
Total Assets	$	6,598,693	$	8,281,572

LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Current portion of long-term debt, net of discount of $676,703 at December 31, 2019	$	1,763,887	$	—
Accounts payable and accrued expenses		1,738,450		1,743,427
Derivative liabilities		378,239		3,661
Deferred revenue		2,913		1,990
Customer advance payments		40		106,609
Total Current Liabilities		3,883,529		1,855,687
Long-term debt, net of discount of $36,169 at December 31, 2019		888,961		—
Deferred revenue		1,495		—
Total Liabilities		4,773,985		1,855,687

Commitments and Contingencies

Stockholders' Equity
Common stock		57		41
Additional paid-in capital		57,957,097		51,721,834
Accumulated deficit		(56,125,982)		(45,289,526)
Treasury stock, at cost		(6,464)		(6,464)
Total Stockholders' Equity		1,824,708		6,425,885
Total Liabilities and Stockholders’ Equity	$	6,598,693	$	8,281,572

MYOMO, INC.
CONDENSED STATEMENTS OF CASH FLOWS


For the Year Ended December 31,		2019		2018
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss	$	(10,713,009)	$	(10,316,739)
Adjustments to reconcile net loss to net cash used in operations:
Depreciation		95,124		69,682
Stock-based compensation		907,993		814,666
Loss on disposal of asset		2,481		—
Bad debt expense		—		16,275
Non-cash interest expense		113,631		—
Amortization of original issue discount		58,296		—
Inventory reserve		(71,265)		32,645
Change in fair value of derivative liabilities		(194,485)		(36,269)
Other non-cash charges		9,423		—
Changes in operating assets and liabilities:
Accounts receivable		(42,028)		(101,494)
Inventories		(213,562)		(140,817)
Prepaid expenses and other		(163,742)		(307,001)
Other assets		(87,265)		—
Accounts payable and accrued expenses		60,742		466,191
Deferred revenue		2,418		(103,340)
Customer advance payments		(106,569)		(109)
NET CASH USED IN OPERATING ACTIVITIES		(10,341,817)		(9,606,310)
NET CASH USED IN INVESTING ACTIVITIES		(51,991)		(126,867)
NET CASH PROVIDED BY FINANCING ACTIVITIES		8,318,469		3,337,598

Net decrease in cash, cash equivalents and restricted cash		(2,075,339)		(6,395,579)

Cash, cash equivalents and restricted cash, beginning of period		6,615,794		13,011,373

Cash, cash equivalents and restricted cash, end of period	$	4,540,455	$	6,615,794

MYOMO, INC.
RECONCILIATION OF GAAP NET LOSS TO ADJUSTED EBITDA
(unaudited)

	Three months ended				Year ended
	December 31,				December 31,
	2019		2018		2019		2018
GAAP net loss	$	(2,761,504)	$	(2,691,954)	$	(10,713,009)	$	(10,316,739)
Adjustments to reconcile to Adjusted EBITDA:
Interest (income) and other expense, net		105,587		(38,082)		(1,140)		(175,409)
Non-cash interest expense		113,631		—		113,631		—
Depreciation expense		24,446		20,850		95,124		69,682
Stock-based compensation		167,687		171,705		907,993		814,666
Change in fair value of derivative liabilities		(38,530)		(4,991)		(194,485)		(36,269)
Adjusted EBITDA	$	(2,388,683)	$	(2,542,472)	$	(9,791,886)	$	(9,644,069)

1 Adjusted EBITDA is earnings before interest, taxes, depreciation and amortization adjusted for stock-based compensation expense and the impact of the fair value revaluation of derivative liabilities.