Myomo Inc.

Good day, and welcome to the MyOMO Inc. Fourth Quarter 2021 Earnings Conference Call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star, then one on your telephone keypad. To withdraw your question, please press star, then two. Please note this event is being recorded. I would now like to turn the conference over to Kim Gallaudet-Swiss. Please go ahead.

Thank you, operator, and good afternoon, everyone. This is Kim Gallaudet-Swiss, LHA. Welcome to the MIOMA fourth quarter 2021 financial results conference call. Earlier today, MIOMA issued a news release announcing financial results for the three months and fiscal year ended December 31st, 2021. If you would like to be added to the company's email distribution list to receive future announcements, please register on the company's website at myelmo.com or call LHA in New York at 212-838-3777 and speak with Carolyn Curran. With me on today's call from myelmo are Paul Godones, Chief Executive Officer, and Dave Henry, Chief Financial Officer. Before we begin, I'd like to caution listeners that statements made during this conference call by management, other than historical facts, are forward-looking statements. The words anticipate, believe, estimate, expect, intend, guidance, outlook, confidence, target, project, and other similar expressions are typically used to identify such forward-looking statements. These forward-looking statements are not guarantees of future performance, and they involve and are subject to certain risks and uncertainties and other factors that may affect MIAMO's business, financial condition, and operating results, including the impact of the ongoing COVID-19 pandemic. These and additional risks and certainties and other factors are discussed in the risk factors and other qualifications contained in MIAMO's filing with the Securities and Exchange Commission, including the Form 10-K for the year ended December 31st, 2021, which is expected to be filed shortly. Actual outcomes and results may differ materially from what's expressed in or implied by these forward-looking statements. Except as required by law, MyOMO undertakes no obligation to revise or update any forward-looking statements to reflect events or circumstances after the date of this call. It is now my pleasure to turn the call over to MyOMO CEO, Paul Godona. Paul, please go ahead.

Thank you, Kim. Good afternoon, everyone, and thank you for joining us. After I provide a business update, Dave will review our fourth quarter and full year financial results and discuss our financial outlook. And following the financial update, I'll give some closing remarks, and then we'll take your questions. During our last call in mid-November, while we were delighted with our third quarter financial results, I flagged a few short-term issues that were impacting the fourth quarter. I mentioned that we were dealing with some supply chain challenges. as well as unexpected post-delivery claim denials by one of our larger payers. I'm very pleased that despite these issues, we generated $4 million of revenue in the fourth quarter of 2021, which was up 6% from a year ago. And in addition, for all of 2021, our revenues were $13.9 million, up a substantial 83% from the prior year, while operating throughout the second year of the COVID-19 pandemic. I'm also pleased to report that we have resolved the supply chain issues, thus enabling us to enter 2022 with the ability to continue to grow our revenues and deliver MyoPro devices to a larger number of patients this year. Our fabrication contractor, GRE, was able to hire and train new technicians, so shipments returned to normal levels by December, which will lead to 2022 revenues as insurance payments are booked. We also announced in January the introduction of the next version of our primary product line, the MyoPro 2 Plus. The 2 Plus includes custom 3D printing of the orthotic components, and we also began in-house assembly of the units at our facility here in Boston, thus reducing our reliance on outside suppliers, and we delivered the initial MyoPro 2 Plus units to patients in early February. With respect to reimbursement, you may recall that we had a development with one of our larger insurance payers. This payer began denying claim payments despite the receipt of preauthorizations and the deliveries of MyoPros to their covered beneficiaries. As a result, we had to submit appeals in order to be paid for our claims, and we're continuing to operate in this manner with this payer. We've been informed by this payer that upon review of the MyoPro, like a lot of new, innovative medical devices, they still considered experimental and investigational, although we have written testimony which contradicts this position, along with substantial clinical research and industry experience with myoelectric technology. They've told us that the denial of claims is part of a temporary internal monitoring process, but we do not have a timeline on when this will be discontinued. Since this change began in late September, we've been paid on the vast majority of more than 50 bona fide claims after successful appeals, and only four appeals have been denied. However, we're confident that these denials will eventually be overturned. We also continue to obtain a significant number of new pre-authorizations for their beneficiaries, and we're continuing to deliver myopros to these patients. So right now, it's business as usual for patients covered by this payer, except that we must take that additional step in order to get paid. We're pleased that during the last year, we added a significant number of new payers, including Medicare Advantage plans, commercial plans, and several state Medicaid plans, which covered their first MyoPro. And in Germany, MyoPro coverage continues to expand, with more payers covering the device for their beneficiaries on a case-by-case basis. Overall, we had a record year of MyoPros approved by the patient's health insurance plans in 2021. Our candidate pipeline, which was 808 at December 31st, did not increase sequentially during the fourth quarter, and I believe several factors came into play. Because of the greater competition for social media audiences during the holiday shopping season, the price for online ads went up. And we decided not to spend additional advertising dollars to generate the same lead flow. This impacted our cost for pipeline ad, which approached $5,000 in the fourth quarter. Instead, we are increasing advertising spend in the first quarter, now, when online competition has typically dropped off so that we get more bang for our buck. We also found that in Q4, patients and their families are more focused on the holiday season than on exploring a new medical treatment, a pattern we also saw in the fourth quarter of previous years. In addition, we saw more candidates drop out or go on hold, possibly due to the spike in COVID cases caused by the Omicron variant that erupted late last year, thus postponing their interest in a MyoPro. These behaviors resulted in fewer patient leads completing evaluations and a greater number of dropouts during the pre-authorization process. And lastly, we are consciously allocating our reimbursement resources toward patient cases and appeals where we believe the prospect of winning an authorization is highest. Unfortunately, that means having to tell some patients we won't be able to service them at this time, resulting in dropping them from our pipeline. So as we enter 2022, we've ramped up our online advertising and we've moved more new patient prospects into our pipeline with just over 200 new candidates added in the first two months of this quarter, an amount approximately the total number added for all the fourth quarter of 2021. And our expectation is for a lower cost per pipeline add in the first quarter compared to the fourth quarter. In Q4, we recorded revenue on a record 107 units and received authorizations and orders for 104 new MIOPROs. Direct billing represented 73 percent of total revenues in the quarter, reflecting higher sales from the V8 and orthotics prosthetics channels in the United States and from international markets. As we prioritized deliveries, we were able to complete in the fourth quarter, given the supply chain constraints, toward channels where we would recognize revenue upon delivery. Our international operations represent approximately 10 percent of our overall revenues, and we're seeing strong growth in patient interest, especially in Germany. And we've been successful in now having 52 percent of the German population covered by insurance plans that are reimbursed for one or more Myopros on a case-by-case basis. With respect to our China-based business, we negotiated some changes to our joint venture agreement with Reiser Medical, which will increase our upfront payment as part of the technology license agreement, which was also executed together with the trademark license agreement. Last year, we announced receipt of patents for our technology and design. for China and Hong Kong, and we recently announced a patent for our latest multi-joint EMG-activated orthosis in Japan. Now, this new patent will be valuable in establishing any future business ventures for the Japanese market. We entered 2022 with a backlog of 154 units, representing over $5.8 million of potential revenue. Of note, both our backlog and our candidate pipeline are larger than they were at the beginning of 2021. So we expect continued revenue growth this year, as we've seen good additions to the pipeline, we've addressed the short-term capacity insurance issues, and we have a growing number of payers that are reimbursing for the MyoPro. Medicare Advantage plans, which cover 40% of seniors in the United States, are among our largest payers, and we continue to engage with staff and medical directors at the Centers for Medicare and Medicaid Services, or CMS, to establish a pathway for Part B Medicare beneficiaries to gain access to a MyoPro for their paralyzed arms. In 2022, we intend to employ a dual-track strategy to try and speed access to the MyoPro for Medicare Part B patients. First, we expect to submit a benefit category change request with CMS in the second half of the year to try and have our benefit category change from DME rental to a brace or orthosis, and in parallel, We intend to submit claims as a rental to the DME MACs before the end of Q2 and engage with their respective medical directors on a case-by-case basis. Because this pre-coverage process will likely involve appeals, we can't provide timetables for either a decision on a benefit category change or for beginning to obtain coverage as a rental on a case-by-case basis, as it really depends on other priorities and projects at CMS but we're going to continue to press our case for these patients. To support further reimbursement of the MyoPro product line, new independent research reports were published last month by researchers affiliated with the VA in Cleveland, who studied the MyoPro in treating stroke and traumatic brain injury patients, and by the Mayo Clinic for brachial plexus injuries. The clinical and functional outcomes they reported support the case for use of the MyoPro for individuals with chronic upper extremity paralysis. and there's more research underway at various other institutions as well. Now I'll turn the call over to Dave Henry to review our financial results in more detail, and I'll come back and provide some additional updates and comment on our plans for the rest of the year.