Myomo Inc.

Good day and welcome to the MiOMO first quarter 2026 financial results 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'll be an opportunity to ask questions. To ask a question, you may press star then one on your touchtone phone. To withdraw your question, please press star then two. Please note that this event is being recorded. I would now like to turn the conference over to Bruce Voss of Alliance Advisors. Please go ahead.

Bruce Voss Thank you, and good afternoon, everybody. This is Bruce Voss with Alliance Advisors IR. Welcome to the MIOMO First Quarter 2026 Financial Results Conference Call. With me on today's call are MIOMO's Chief Executive Officer, Paul Goudonis, and Chief Financial Officer, Dave Henry. Before we begin, I'd like to caution listeners that statements made during this 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 may involve and are subject to risks, uncertainties, and other factors that may affect MIOMO's business, financial condition, and operating results. These risks, uncertainties, and other factors are discussed in MIOMO's filings with the Securities and Exchange Commission. Actual outcomes and results may differ materially from what's expressed in or implied by these forward-looking statements. Furthermore, except as required by law, MIOMO undertakes no obligation to revise or update any forward-looking statements to reflect events or circumstances after the date of this call today, May 7, 2026. It's now my pleasure to turn the call over to MIOMO CEO, Paul Goudonis. Paul, please go ahead.

Thanks, Bruce. Well, good afternoon, and thank you all for joining us today. We remain very excited about the opportunity in front of us to improve lives and grow our company. Chronic upper limb paralysis is an underserved medical condition, and each year stroke leaves hundreds of thousands of Americans with lasting arm impairments. When you add in spinal cord injury, traumatic brain injury, and brachial plexus injuries, the addressable U.S. population reaches into the millions and globally millions more. For most of these patients, The standard of care has been a passive brace, ongoing physical therapy with diminishing returns, or resignation to permanent loss of function. AmioPro is the only commercially available powered arm orthosis in the U.S. that uses non-invasive EMG sensors to detect the patient's own muscle signals and amplify them into functional movement, thereby permitting paralyzed individuals to feed themselves, carry objects, return to work, and reclaim independence at home. That's not an incremental improvement on existing care. It's really an entirely different category of device, and Myoma owns it. Let me start with a quick real-life story. Our staff just helped Mike, who lost the use of his right arm due to a brachial plexus injury from a motorcycle accident when he was just 17 years old. And now, some 50 years later, he's using both arms again with the help of a MyoPro. He's carrying objects safely around his home, and he's doing household tasks such as mowing his lawn. Our MyoPro has improved the quality of life for Mike and for his wife, reducing the burden of care from his impairment, and that's what this is all about. Several positive factors are converging right now to drive MyoMo's success. Reimbursement, distribution, and technology. Reimbursement by CMS in a new Medicare Part B benefit category with hip-fix codes for the MyoPro has opened access to a Medicare population of tens of millions, and remove the single largest historical barrier to adoption. New clinical studies and in-network contracts with a growing number of commercial payers have significantly increased market access for patients covered by these plans. We're transitioning our go-to-market strategy with the distribution system based on recurring patient sources from rehab hospitals and O&P providers, to reduce our customer acquisition costs and to build the foundation for accelerated growth going forward. And our investments in technology are increasing the value to patients and clinicians while reducing our operating costs as we scale the business to sustain profitability. Earlier this year, we established four success pillars for 2026. Recurring revenue, market access, operating leverage, and innovation. With strong progress against each first quarter, revenue and profitability exceeded our targets. We measure our progress against these four success pillars, so let's review each of them. Number one, the shift to recurring patient sources. We launched the MyoConnect program in mid-2025 to encourage therapists and physicians at rehab hospitals, stroke clinics, and other healthcare facilities to refer prospective MyoPro patients to us or to a local ONP partner. These channels not only provide recurring referrals, but they also carry lower acquisition costs and higher conversion rates versus direct-to-patient marketing. With Medicare coverage in place and the new MyoPro 2X introduced last year, it was the right time to bring the benefits of the MyoPro to the incidence population of patients who are currently in outpatient therapy, expanding our target market beyond the individuals with chronic arm paralysis and the large prevalence populations. We reoriented our field clinical team, added sales specialists, and conducted numerous in-service educational sessions at these rehab locations. I'm pleased to report that now more than 150 rehab facilities are now referring candidates to us. The O&P channel is another source of recurring referrals, and our O&P revenue grew 79% year over year as we trained and certified additional CPOs and jointly implemented outreach programs. Earlier this week, we announced that we've been working with Ottobock's U.S. clinical operations to certify them as MyoPro Centers of Excellence, and we recently conducted training for over 20 clinical specialists from around the country as part of their national rollout. Ottobock is the world's largest provider of O&P products and clinical services, and we're very pleased to be working so closely with them. In Germany, we have more than 100 O&P practices working with us to provide the MyoPro to their patients, The insurance environment in Germany is highly favorable, and our international revenue has reached a Q1 record of approximately $2 million. We continue to expand our sales and clinical staff in Germany, and later this month we'll be attending the OT World Conference in Leipzig to engage with additional O&P clinics. This conference is the largest O&P event in Europe. As a result of these efforts, we're tracking extremely well against our targets at consistently increasing revenue from recurring patient sources. Pillar number two, that's the second success pillar, is to increase market access for patients by signing additional payer contracts. As discussed in March, we signed a national arrangement with Elevance, which manages a number of Anthem Blue Cross Blue Shield plans in 27 states, including large ones like Texas, Ohio, Virginia, and California. We've been entering into these payer contracts to secure myoma as an in-network provider with case-by-case coverage determinations and an agreed-upon price for the MyoPro. As a result, we're now seeing a significantly higher authorization rate from these payers' Medicare Advantage and commercial plans. And over the next several months, I expect we'll sign additional state contracts under the ELEVEN's national arrangements. And since we secured Medicare coverage in April of 2024 and added various commercial and Medicare Advantage contracts, We've gone from just 9 million covered lives to 158 million lives currently. Puller number three is to demonstrate operating leverage and the path to profitability. We demonstrated early operating leverage in the first quarter with revenue up 3% while OpEx was down 1% year over year. We also expanded gross margin by 100 basis points. And the combination of these accomplishments resulted in a 20% improvement in adjusted EBITDA. The pillar four is to continue to invest in product development and clinical research. At the end of March, we launched a new mobile app, which allows clinicians, patients, and caregivers to use their smartphones to adjust the MyoPro device settings, display their muscle movements and EMD signals, and collect usage data that can be used by therapists and physicians. The app also eliminates the need to ship a laptop with our proprietary software to each user, reducing our MyoPro material cost by about 10%. you'll see this benefit flowing through the gross margin beginning in the second quarter. Another R&D investment is a randomized control trial being conducted by the University of Utah Rehabilitation Hospital. After a successful pilot last year, the university's IRB approved the study, which will compare the outcomes of users with the MyoPro against those who receive the current standard of care of occupational therapy. We've enrolled 18 of the 50 subjects to date, and when completed, and assuming similar results to our pilot last year, this clinical evidence is expected to support increased reimbursement of the MyoPro. Finally, development of the MyoPro3 Next Generation platform is progressing. We're focused on enhanced functionality and increased processing power to support future software-driven innovations. So progress on each of our four success pillars is tracking with our targets, and we're excited to keep on delivering. On the marketing front, we added a new marketing executive and engaged a new digital ad agency in Q1. As a result, we've also refined our marketing strategy with a new approach to digital channels and data-driven targeting. We're also expanding the use of social media to engage directly with healthcare providers and to introduce the MyoPro in geographies with payer contracts. These initiatives are already improving lead quality, which is resulting in more pipeline ads for lead generated and reducing patient acquisition costs. We expect further efficiency gains as these programs scale throughout 2026. With that overview, I'll turn the call over to our CFO, Dave Henry, to walk through the financial results in more detail.

Thank you, Paul, and good afternoon, everyone. As Paul just discussed, we've been busy executing against the success pillars we introduced earlier this year, and I'm pleased to report on the progress we've made. Our revenue for the first quarter of 2026 was $10.1 million, up 3% versus the prior year period. The increase was driven by a higher average selling price, or ASP, partially offset by a slightly lower number of revenue units. ASP in the first quarter was $58,800, up 9%. versus the prior year due to a higher Medicare Part B and Medicare Advantage reimbursement amounts reflecting beginning of year fee updates, as well as a positive channel mix, including higher international and Medicare Advantage revenues. We delivered 172 MyoPro revenue units during the quarter. Looking at payer mix, Medicare Part B patients in our direct billing channel represented 51% of revenue in the first quarter, which was down 12% in dollar terms compared with the prior year. Medicare Advantage patients on our direct billing channel represented 19% of first quarter revenue, and in dollar terms was up 11% compared with the prior year quarter. As many healthcare providers are seeing, the macro environment for Medicare Advantage plans continues to be challenging. To mitigate the impact, we are focusing on in-network patients obtained through our contracting efforts, where early results are showing higher authorization rates compared with non-contracted payers. The direct billing channel represented 71% of revenue in the first quarter compared with 79% in the prior year quarter. Direct billing revenue declined as we continued transitioning our business toward recurring patient sources. Revenue from recurring patient sources represented 49% of first quarter revenue, up from 25% in the prior year. As you can see, we have made significant progress in shifting toward recurring patient sources at a lower patient acquisition cost compared with advertising-driven direct patient revenues, which carry a much higher cost to acquire. Breaking down the recurring patient sources, approximately 20% of first quarter revenue was generated by direct billing referrals. Another 20% was generated by the international channel, 8% from the USOMP channel, and the rest was from VA payers. International revenue is up 53% year-over-year, and the US O&P channel was up 79% year-over-year. As of March 31, 2026, the pipeline stood at 1,680 patients, an increase of 10% sequentially and 13% year-over-year. During the first quarter, we added 723 patients to the pipeline, which is up 7% sequentially and 3% year-over-year. Eleven percent of first-quarter pipeline ads were generated from direct billing referrals, demonstrating the traction so far with the MyoConnect program. Sixty-two percent of first-quarter revenue units were from intra-fill revenue units, which is up from 45 percent of revenue units a year ago and demonstrates our increased velocity in fulfilling orders. Sixteen percent of first-quarter orders came from direct billing referrals. We exited the quarter with a backlog of 226 patients. Gross margin for the first quarter of 2026 was 68.2%, up from 67.2% a year ago, driven by a higher ASP and material cost reductions, partially offset by higher labor and travel costs needed to fit patients on site. Operating expenses for the first quarter of 2026 were $10.1 million, down 1% over the prior year quarter. Decrease was driven primarily by lower R&D and G&A expenses, partially offset by higher sales, clinical, and marketing expenses. Operating loss for the first quarter of 2026 was 3.2 million, which narrowed from an operating loss of 3.5 million in the prior year quarter. Adjusted EBITDA for the first quarter of 2026 was a negative 2.3 million, compared with a negative 2.8 million in the prior year quarter. The improvement was driven by a lower operating loss I just mentioned and higher add-backs for depreciation expense and stock-based compensation. First quarter non-operating income includes a mark-to-market gain from the change in fair value of derivative liabilities, partially offset by cash and non-cash interest expense under the Avenue Capital Term Loan. Net loss for the first quarter of 2026 was $3 million, or $0.07 per share, This compares with a net loss of $3.5 million, or $0.08 per share, in the prior year quarter. Turning now to our balance sheet and cash flow, as of March 31, 2026, cash, cash equivalents, and short-term investments were $15.7 million. Reflective of the improvement invested EBITDA, our use of cash was $2.7 million in the first quarter, compared with $3.2 million used in the first quarter of 2025. Let me conclude my remarks with our forward-looking guidance. As you just heard, we are making tremendous progress on our 2026 objectives. In the first quarter, we achieved higher year-over-year revenue, improved gross margin, and lower operating expenses, resulting in improved adjusted EBITDA. Our transition of the business toward recurring patient sources is running ahead of plan. In addition, the marketing changes we initiated are beginning to take effect. As a result, we expect second quarter revenue to be in the range of $10.3 to $10.8 million, which is up 7% to 12% year-over-year and up 2% to 7% sequentially. We expect gross margin in the second quarter to be higher year-over-year, but lower sequentially due primarily to channel mix. We expect operating expenses to increase slightly versus the first quarter, reflecting a modest increase in advertising spending. For the full year, we are reiterating our revenue guidance in the range of $43 million to $46 million, and we affirm our full-year operating leverage expectation to limit the growth of operating expenses in 2026 to about one-half the growth of revenue. With that financial overview, I'll turn the call back to Paul.

Thanks, Dave. Well, to summarize, we're keenly focused on implementing our four success pillars to grow MyoPro volume and revenues while improving key financial metrics, including gross margin, adjusted EBITDA, and cash usage. Our technology is making a dramatic difference in the lives of patients who are suffering with this chronic arm paralysis. And now, Dave and I are ready to take your questions. Operator?

Thank you. We will now begin the question and answer session. To join the question queue, please press star then 1 on your touchtone phone. If you are using a speakerphone, please pick up your handset before pressing any keys. If at any time your question has been addressed and you would like to withdraw your question, please press star then 2. At this time, we will pause momentarily to assemble our roster.

While we're waiting for the first question, I'd like to mention that in May, we'll be participating in the SIDOTI, the Virtual Investor Conference, and AGP's Annual Healthcare Companies Showcase. And on June 23rd and 24th, we'll be presenting at the iAccess Alpha Select Virtual Conference and holding one-on-one meetings with investors. Okay, operator, let's take the first question whenever you're ready.

Our first question comes from Chase Knickerbocker of Craig Hallam. Please go ahead.

Good afternoon. Thanks for taking the questions. Maybe just first on the ASP increase, could you just go into a little bit more detail as far as what drove that, as far as kind of the mix specifically that you were referring to and kind of the drivers within that mix, you know, higher or lower within ASP? And then I guess the next question is just how sustainable is that? How should we be thinking about kind of ASP sequentially through the year? Thanks.

Yeah, sure. So the ASP was $58,800. The increase was due in part to the fee increase that happens at the beginning of every year with CMS. That also affected the Medicare Advantage payers as well. So both Medicare and Medicare Advantage, those were about 70% of revenues in the first quarter, and those were all subject to that fee increase. Also, International revenues, we get some foreign currency benefit from that. So international is our second largest channel in terms of both revenues and ASP, and they were 20% of revenues. So those are the reasons why. And then in terms of sustainability, I do expect that the ASP will come down a bit due to channel mix in the second quarter. And I think it's still prudent to assume maybe around a, you know, a $55,000 or so ASP on a more, you know, longer-term basis.

Understood. Maybe just on the advertising efficiency side, can you just kind of break down, you know, what the percentage kind of benefit was in the quarter from MyoConnect? Was the majority of kind of that decrease in cost for pipeline ad driven by MyoConnect, or was there some improvements that you are seeing on the digital marketing side?

Just in terms of the metrics, you know, the 11% of the pipeline ads in the quarter were MyoConnect, and those come at a low cost per pipeline ad, but we're not advertising to get those. So that's a big part of it. And plus, you know, just some of the efficiencies we're seeing, as Paul mentioned, we are seeing sort of a lower cost or more pipeline ads per lead that we're generating. through some of these efforts that we're making.

Yeah, we're finding that the quality of the leads, you know, which was an issue a year ago, Chase has really turned around. And now we're getting more of the leads that are generating. We're engaging with those patients, and they're medically qualified, so they're moving into the pipeline. We redid our TV advertising as well with a new 120-second slot. And that's paid off really well, a good cost per call, and the patients that see that or their caregivers are really engaged. So those couple factors have reduced our cost per pipeline ad.

And so you kind of mentioned ramping some of the marketing spend as we go through the year here into Q2. Is that kind of driven by seeing some improvement on that side of things, or maybe just talk me through kind of the drivers behind that kind of reinvestment?

Yeah, I would say that is the case, and it's also something that we do typically every year. You know, second and third quarters are typically the highest spending for advertising, then it comes back down again in the fourth quarter just because of the you know, the efficiencies that happened during the fourth quarter, or the inefficiencies, I should say, that happened in the fourth quarter.

And also due to the revenue cycle, which could be four to six months or longer, depending on the patient's insurance, advertising now builds a good pipeline and backlog for Q3 and Q4 revenue.

And then just last for me, guidance assumes a step up in growth in the second half. Guidance has reiterated the mix on a per quarter basis was a little bit different than what we kind of expected. Can you just kind of walk us through what the top end of your guidance assumes and the bottom end as far as kind of the moving pieces and the assumptions in there? Thank you.

I think the top end of the guidance I think would reflect more from the direct billing channel. particularly as it relates to more success on the referrals side of things. Myoconnect, I think, is probably the biggest swing factor in terms of our guidance. You know, good news and good traction with that, which so far we're seeing, would lead us to trend towards the higher end of our guidance. And if for some reason that were to, you know, some of those results would begin to flatten out or going down, that would, you know, drive us toward the lower end of our guided range.

Understood. Thank you.

Our next question comes from Edward Wu of Ascendant Capital. Please go ahead.

Yeah, congratulations on the quarter. My question is on international. Once again, you had another very strong quarter, very good growth record revenue. How much potential can the German market have And is there ability to accelerate the growth near term?

Well, you look at the German market, over 80 million population compared to, say, 330 here in the U.S. So it's about 25 to 30 percent of the population. total size of the U.S. market. So you can see that there is definitely upside potential there. Also, as we've seen, because of the statutory health insurance social court rulings over there, we're getting good traction with the insurance companies there. So that's why we're continuing to add resources, which is the way to grow that German business. I'll be there later this month in Leipzig, Germany, for the OT World Conference to recruit more O&P providers there. We'll also start looking at some other international markets.

That sounds good. You mentioned other international markets. I know you previously have said that the German market was kind of unique. Other European markets, or would it be possibly markets in other areas? And any updates on the Chinese market?

Probably the other European markets where we can get to reimbursement relatively quickly. So we'll be talking to some O&P providers in these other countries to see what they feel about the reimbursement environment. We always look at where I'm going to invest another euro, where is the best place to put it. So far the best return has been in Germany. and also staying in Europe would help us leverage the infrastructure we have over there. In China, we continue conversations with China Lead Ventures, which was one of the major investors in the joint venture. We've had regular conversations to introduce new potential partners, medical device manufacturers and investment partners into the JV, but nothing has been finalized over there as far as the next step with the JV.

Great. Well, thanks for answering my questions, and I wish you guys good luck. Thank you. Thank you, Ed.

Our next question comes from Jeremy Perlman of Maxim Group. Please go ahead.

Thank you for taking my question. Firstly, I want to talk about the MyoConnect. You mentioned that you had roughly 150 rehab facilities that are referring patients currently. How extensive do you think that runway is? How many more rehab clinics is in the pipeline to convert to this MyoConnect?

Well, you know, we've had tremendous results in just the first nine months, Jeremy, you know, since we started that in mid-2025. And, you know, I expect we're going to add, you know, new clinics every month. You know, I'd love to get to the point where we have several hundred by the end of this year. There are about 1,500 stroke clinics in the United States, plus three. many other major hospitals that treat stroke patients. And then on top of that, you know, we're finding a lot of success with these smaller private rehab clinics. You know, there are therapists out there who have their own clinic, and they are referring myopro patients to us. So our goal is to grow the number of rehab facilities to a couple hundred by the end of the year and also see what I call same-store sales growth, where after referring that first patient, they'll refer a couple of others, and that should grow not only this year but well into next year. And that's why I see we're laying the foundation for accelerated growth next year. You can imagine hundreds of these clinics, you know, then growing the number of patients they refer next year. plus new clinics that come online next year as MyoConnect partners, and plus you have more and more OT providers coming on. We just announced Autobot. They've got over 50 locations in the U.S. We just trained 20-some of their clinicians around the country. They're going to be spreading the word within their territories. We've got other major national accounts, you know, lined up for similar type of training going on.

Okay, that's great. And then just to follow up, you mentioned that you hope this is laying the foundation for accelerated growth. Hopefully they'll refer these clinics. Once they refer the first patients, they'll refer more. Is it too early to tell? Have you seen that play out with the rehab clinics that are already in the MyoConnect program, that once they refer the first patients, does that give you confidence that in 2027 we could see a big uptick?

You know, we are starting to see those sort of green shoots. You know, remember that most of these have just come online, maybe their first referral in December or January, and the patient has to go through the insurance process, has to get fit with the device. then goes to that clinic for therapy services, and then they see the outcome. So it may be six months from the time they make their first referral until we make the second, but I'm confident in the way our device performs for these patients that we'll get these ongoing referrals.

Okay, understood. And then also just related to the last question related to the MyoConnect, do a higher percentage of the patients that are referred through this program convert eventually to the backlog and to a paying customer, or... Is it similar to your legacy advertising direct to consumer marketing that pulls into patients where the certain percentage drops off and then whatever percentage goes to the final?

That's a good observation. It's a very good observation because these patients are better in two respects. One, we've trained the clinicians that are referring to pre-qualify these patients for us. So they are sending us better quality patients, meaning they are more likely to benefit from MyoPro in terms of their efficiency. medical qualifications. So that's a plus. They're a higher quality patient than what comes in from the general advertising. And number two, because these clinicians know that Medicare will cover this, they're sending us a higher percentage of Medicare than in the general population. So it's almost like a double win from these referrals from the Myoconnect program.

Okay, that's great. I understand. And then this last question. I know you mentioned on the last year of your investor day a big part of there was a section about adjudicating denied claims. I just wonder any follow-up, maybe how is that, the success rate of that, is that steady? Has it been improving? Maybe anything you could talk about that would be great.

Yeah, we continue to do these ALJ hearings, still running about that same success rate. However, as we mentioned, where we have contracts with these various plans, we have a much higher authorization rate right up front, and so you don't even have to go to the hearings.

Okay, that's great. All right, thank you for taking my questions. I'll hop back in the queue.

Yeah, thank you.

Once again, if you have a question, please press star, then one. This concludes our question and answer session. I would like to turn the conference back over to Paul for any closing remarks.

Well, thanks, operator. And thank you all for joining us today and for your questions. And we look forward to seeing and hearing from you in the coming months. So thanks again and have a good evening.

This concludes today's conference call. You may now disconnect your lines. Thank you for participating and have a pleasant day.