Conference Transcript - MYO 2026-09-16

Sean Lee, Analyst — H.C. Wainwright

Good morning, everyone, and thank you for joining us at the 28th Annual HC Wingright Global Investment Conference. My name is Sean Lee. I'm a Senior Biotech Analyst at the bank. And joining me for today's fireside chat is Mr. Paul Guindonis, the CEO of Myomo, and Mr. David Henry, the CFO of the company. Myomo is a leader in the development of robotic prosthetics for stroke patients. And so without further ado, please welcome Paul and David to this fireside. So good day, Paul and David, and glad to see you joining us. To start us off, and for the benefit of the audience who may not be familiar with Myomo, could you provide us with a high-level overview of the company and your business?

Paul R. Gudonis, CEO

Sure, glad to. Well, good morning, everyone. Let me start with a question. Do you know 100 people? And you probably know someone with a paralyzed arm. because it's a 1% prevalence. You know, someone who's had a stroke, a spinal cord injury, brachial plexus injury from a motorcycle accident, a veteran might have been injured. These individuals, and it's over 1% prevalence to over 3 million people just in the United States with chronic arm paralysis. They've suffered a stroke, and there's 800,000 strokes a year in the United States. About 20%, 30%, unfortunately, die as a result of the stroke and complications. The other half a million go through rehab to try to restore function because the stroke has damaged the motor cortex due to its blood clot or hemorrhage. So we'll go over here in New York to NYU Langone or up to Burke Rehab and try to restore that function. And it works for about half of the individuals. But the other half, a quarter million a year, are basically told, get used to it. You'll never use that arm and hand again for the rest of your life. And we're showing that that conventionalism doesn't hold anymore. So we're a commercial stage company doing about $45 million of revenue. It came out of MIT about 20 years ago. We've got an exclusive patent portfolio, and we have a powered arm brace that you wear as you think about moving your arm. It basically reads your brain signals through your muscles. It's non-invasive sensors. It enables you to pick up a cup, feed yourself, to cook your food, walk around the house, or go back to work. And so this myoelectric orthosis is in the market. We've got almost 4,000 people using it, primarily here and in Germany. in about 80 to 100 units a month, traded on the New York Stock Exchange American. So that's kind of an overview of the company.

Sean Lee, Analyst — H.C. Wainwright

Thank you, Paul. For the first part of our discussion, I'd like to focus on the company's current business and commercial execution. So a big shift we've seen for the better part of the last two years has seen the company switch from almost 100% direct-to-consumer marketing to a mix of direct DTC marketing and recurring patient sources. So my question is, what drove this big shift? And have you seen any difference in the type of patients that you're attracting through the different channels?

Paul R. Gudonis, CEO

Well, two years ago, we finally got Medicare coverage for our device. And that was really an inflection point. And our revenues have more than doubled over those two years. And as a result of getting more secure reimbursements, we now have therapists, physicians, willing to recommend the product to their patients. Because if there's uncertainty about reimbursement, there's a reluctance to do so. But now that we've got that Medicare coverage, we've also signed contracts where we're in network with the Elevance, with a number of other payers. You know, we are both the manufacturer of the device, but we're also forward integrated. We are a Medicare accredited provider. So we have our own clinicians in the field, which will provide the devices to patients. And we initially started marketing to that prevalence population of those 3 million people, but they're not in the rehab hospital. Their neurologist told them 10 years ago, can't do anything for you. So we reached out to them via social media, Facebook, television advertising. We have a call center in Texas, got a couple thousand leads every month, which we then marketed as a direct-to-consumer. We then evaluate those patients, get their insurance information, get an authorization, and then deliver. However, now that we've got Medicare coverage, we're going to these rehab hospitals. we have a field clinical team that does in services meets with the physicians with the therapists that see these patients and we're getting these patients in this what i'll call that incidence population that quarter million of people that are left with chronic paralysis after six to twelve months of rehab and so at that point uh what we find is your question was they're better patients uh they're just six to twelve months out from their stroke instead of 10 or 20 years. So they're more motivated. They have less contraindications. And as a result, by getting these patients from the therapist, we find that there are higher quality patients in terms of they meet our medical criteria. They've got insurance that more likely will pay for it because we give the therapist, okay, here's a list of insurance plans that are likely to cover this. And therefore, our conversion rate of what we call a pipeline ad is much higher from these referrals. That's why we did this evolution last year and where we went from 25% of our revenue being what I call recurring patient sources. It's over 50% now, just in 12 months, over 300 rehab hospitals around the country and more in Germany referring patients. And I expect in a couple of years, we'll have a thousand of these locations referring patients to us on a regular basis.

David A. Henry, CFO

A couple of data points around that too, just to illustrate the benefit of marketing more towards that incidence population first under directed patient advertising about one to one and a half patients out of every 100 leads we might generate may qualify for a mile pro because you know they have these contrary to the indications that paul had referred to uh but with the uh the program that we call mild connect which is uh the you know the referral ecosystem that we're trying to build uh we're finding that the hit rate is about 10 times that So it's helping us in terms of being able to generate operating leverage and to get closer to our, you know, cash flow break even point, which is around, you know, on a free cash flow basis, around $15 million of revenue per quarter. Secondly, you know, you know, as part of these efforts, Paul mentioned that, you know, we're working with these clinics in terms of which types of patients to refer to us. We find under direct-to-patient advertising about 25% of the leads we generate are Medicare. But then under the MyoConnect referral program, we're finding that of the pipeline ads we get, about half of them are Medicare, where reimbursement is more certain. So those are tangible benefits to what we're doing, and this is why we're seeing some of the results we're seeing.

Sean Lee, Analyst — H.C. Wainwright

Great. Thank you for that. You mentioned that the company now has over 300 referral sites. uh most of them added over the last three to six months even so what do you have a goal in mind and how many referral sites you want to hit and uh what percentage of these sites have started you know multiple referrals i guess so there are several thousand of these uh rehab clinics around the country you know they're at major facilities like a kessler rehab in new jersey and they also have many outpatient facilities in suburban areas uh and so when you add it all up is several thousand.

Paul R. Gudonis, CEO

So, you know, we've targeted to get to a thousand of these referral sources in the next several years. And what we see is, and I'll use a model called sort of same store sales growth, is while they're not purchasing the device from us, by getting these referrals, I look at they're almost like a model of more stores referring to us, but then also same store sales growing. So what we're seeing is the typical process is you go and do the clinical education, have a patient evaluation day, you get that first patient referral, they get their device, they go back to that facility for rehab training to learn how to use our device. And then the therapist, doctors will refer the next several patients. So we've already seen 15 to 20% of these facilities referring a second or third patients and so on. So I see two growth vectors here, more locations, and then more units per year per location. So that's why we think we'll see accelerated growth going forward.

Sean Lee, Analyst — H.C. Wainwright

Great to hear that. In addition to the referral sites, I know the US OMP channel, even though it's only a small portion of the overall revenues right now, is also one of the fastest growing, increasing by over 100% over the last year. So my question is, what's driving this growth? And I know you guys also signed a deal with the Autobot Care recently. So what milestones can investors use to judge this rollout and this growth? And are there any differences in the economics between the OMP channel versus your direct billing channels?

Paul R. Gudonis, CEO

Well, I'll let Dave talk the economics. We just came back from the National Orthotics and Prosthetics Association meeting last week where we met with our major customers. There are about 3,000 of these OMP clinics around the country. You normally wouldn't run into them unless you were in amputee because they fit prosthetics, so you needed a specialized brace. And they're now being consolidated. Hanger Clinics, which is one of our customers, they have over 900 clinics in the U.S. As you mentioned, Autobach, big prosthetics company out of Germany. They've bought about 80 to 90 locations in the U.S. Osser, integrated forward. They have now their four motion clinics. So we met with the senior executives of all of these organizations. And now that we introduced the new product, the MyoPro2X last year, plus with the Medicare reimbursement, plus you see all the clinical research supporting the device now they're beginning to adopt this so you know grow over 100 percent uh you know year over year off of small bays but these they see all these stroke patients uh every year because uh stroke patients when you have this condition called hemiparesis it impacts not just the arm but also the leg it's a condition called foot drop where you can't pick up your toe and you'll trip and so they provision what's called an ankle foot orthosis or afo to these patients already and we have a campaign we call look up because 82 of those patients who've had a stroke that get an afo for their foot also have arm impairments and so encouraging them to uh look and it's a very attractive economics for them as you know they've been discussing yeah i mean the sp for our device uh as the fee for medicare is a little over $68,000.

David A. Henry, CFO

So the OMP channel, when we provide a device through that, we'll probably split the fee with them because they're taking on the reimbursement risk. And we just, in that situation, are just a manufacturer. So it's a very high contribution margin percentage business when we're selling through the OMP channel. And it's a win-win for both because it's one of the highest revenue value per unit opportunities that are in the OMP channel today, which is the mile pro.

Sean Lee, Analyst — H.C. Wainwright

Got it. Thank you for the clarity. As the company pivots to more recurring patient sources, how does it affect your average cost per pipeline ad, which I know is a metric that you've previously used to see the effectiveness of your marketing?

David A. Henry, CFO

Yeah, I mean, under the direct to patient advertising, our advertising cost per pipeline ad has been around $2,500 per patient per pipeline ad. Overall, when you yield it off, because not every pipeline ad becomes a revenue unit, it's $10,000 plus per patient. But that's still, when the ASP is $68,000, it's still a very good contribution margin activity. So as we move forward here and we start to rely more on referring sources and less on direct-to-patient advertising, the expectation would be that that cost would come down. The cost will change because we now have a sales and clinical force that we need to add in and add into that equation, but then that's offset by a lower advertising cost and then the combination of that combined with same-store sales, if you will, that Paul mentioned earlier should drive that cost down i see um looking at the gross margin which also improved significantly over the last year from 63 to 72 so what was the primary driver behind this is it just the volume increasing volume or manufacturability and also where do you see the uh long-term margin to reach yeah so the in second quarter is as sean mentioned the gross margin was like 940 basis points higher year over year. About 200 basis points of that was a higher average selling price. Most of that we could attribute to the CMS price increase that went into effect at the beginning of 2026. It was around 2%. Roughly, I'm going to say 70 to 80 basis points of that increase came from material cost savings. For example, we now have an app that we have now that is replacing a laptop that we used to provide for every patient that laptop will cost about five hundred dollars per patient so we're no longer providing that there are other cost reduction activities that will reduce material cost later this year and into 2027 that includes insourcing the 3d printing of the orthotic shells that are on the brace and so we'll insource that activity so more material cost savings are coming and then the rest of the you know the gross margin improvement was really driven by a combination of lower overhead spend year over year combined

Sean Lee, Analyst — H.C. Wainwright

with a 19 increase in volume year over year so as long as the volume continues to accelerate and we would expect that there would be continued fixed cost absorption opportunity great certainly looking forward to that now focusing on the company's growth and future directions recently you announced a hand only device in Germany rather than the hand plus arm Myopro. So what's the anticipated launch timeline for this device? What's the reimbursement pathway? And are there any plans to bring this device to the U.S. as well?

Paul R. Gudonis, CEO

So I was in Leipzig, Germany for the European orthodox prosthetics conference back in May. But as you mentioned, we announced the development of a hand only device because our current device moves the elbow, we can adjust the wrist and the hand but about 60 percent of the patients can move their elbow but they can't open and close their hand as a result of a stroke so we are taking our existing product modifying it to just have a hand only version and we're introducing it in germany because uh there's reimbursement for a handling device already in germany so it's a faster path to commercialization we expect uh you know in mid 27 that product will be you know clinically tested in manufacturing And so that will open up more revenue out of Germany. I mean, that's already 18 percent of our revenue and growing 30 to 40 percent a year. And then we'll bring that to the U.S. And the U.S. will have to go through the traditional CMS process to get a new reimbursement code for a hand only. But with the research we have, the existing code, you know, it might be a one to two year process to get that reimbursed. And we can introduce it to the large number of people that only need the hand also in our CRM database. You know, we've got 100,000 patients, reach back to them and say, hey, you were ineligible for the device because you need to adjust the hand. By the way, I might be able to serve you now. Got it.

Sean Lee, Analyst — H.C. Wainwright

Understood. The company also recently announced the development of MyoPro3, which is the next generation flagship product. So what's the improvements that we expect to see in this and what milestones you need to hit before MyoPro3 is ready for the market?

Paul R. Gudonis, CEO

Well, we significantly increased the size of our engineering staff the last couple of years. And so the next generation product we call the MyoPro3. Currently, it's the MyoPro2 that's in the marketplace. So total redesign of the product, making it lighter weight, smaller profile, more functional, different motor capabilities, adjustability, new processors, so it'll be AI-enabled as well. So that's in development. In fact, next week, we have several patients coming in to do testing on the final design work. Then we'll have to put that together with our own sort of clinical validation on the number of patients in the first half of 27, then move it into manufacturing. And it's already covered under the existing reimbursement code. It's just the next generation of the product. And that gives us a platform for a hand-only device, also the ability to scale it down for pediatrics. So before COVID, we were working on a product called the Myopal, because there's 150,000 kids in the United States under the age of 18 with a paralyzed arm. It might have been a birth brachial plexus injury where the shoulder got damaged in the birth canal, stroke in utero, cerebral palsy, spinal muscular atrophy. We had to postpone that development because of COVID. No one was vaccinated and so on. So now with the Myopro 3, we'll scale it down and be able to provide a device for the kids. And that's a wonderful thing to see a five-year-old girl who grew up without being able to move her arm. so you move around for the first time in your life so we think that's another bigger market opportunity for us sounds uh exciting and certainly looking for more news to it in the future uh i know the company is also running a randomized control study at the university of utah so could you provide us with an overview of this study and what you hope to learn from it so we already have a bolus of research out there patient registry clinical trials and so on that's what convinced the Medicare medical directors to provide coverage for the device, but we still have some recalcitrant Medicare Advantage plans. And so our approach is, okay, we've talked to medical directors, reimbursement consultants, we said, oh, we should do a large-scale RCT. So we have a contractor with the University of Utah Rehab Hospital, a leader in this whole area of myoelectrics, an N of 50. So 25 patients will be the control group, the standard occupational therapy after their stroke. The other 25, we'll get a myoprope in the therapy and training, and we'll follow them for six to 12 months in terms of outcome measures like functional tasks to be able to conduct certain activities, patient evaluations, fugal myos scores, and then we'll publish that in 2027. And I expect a very positive outcome, right? Because we know these patients with therapy only are not going to recover, and yet they will be able to function with a myoprope.

Sean Lee, Analyst — H.C. Wainwright

And we expect that will lead to either an lcd or ncd with cms or help us make the case to medicare our advantage medical directors that they should be covering this just like standard medicare does for patients got it that's very helpful um final question is a bit of a high level one i guess looking into you know 2027 and beyond we've just we discussed there's a bunch of growth drivers behind your expected growth. So there's the referral site expansions, the increasing referrals per site, the increasing payer coverage, the OMP channel partnerships, and as well as new products and growth in international markets. So which one of these do you think will be the most important near-term growth drivers that investors should really watch for?

David A. Henry, CFO

Keep an eye out on MileConnect and the referral program and building that ecosystem because that's going to enable us to continue down the pathway of generating the operating leverage we need. The good news is that that activity is organic. In 2025, we took people that were providing post-delivery support to patients and converted them and have them started generating referrals. There was no incremental cost to generating these referrals. In 2027, the intention is to scale down the advertising dollars, put that savings into hiring more people to put out in the field. So that activity should increase the number of referrals and with a better hit rate lead to better growth. Then, of course, you have things like the O&P channel should continue to grow as more and more clinics provide the device to their patients and then you know the new product in Germany and so you know the expectation is is you know for 45 to 47 million dollars of revenue this year we would expect revenues to grow obviously continue that growth into 2027 thank you David and to finally to close us off what's the company's cash position looking like what's your cash burn rate and what's the expected runway yeah we we have a little over 13 million of cash at the end of the uh at the end of the second quarter our guidance for the rest of this year is to burn only two million dollars for the entire second half of the year so when you combine that with about a five million burn in the first half that was about a seven million burn for the year uh by comparison we burned 18 million dollars in 2025. so the burn rate is coming down driven by this these activities that we're talking about we have more revenue this year on a lower headcount. Doing that, AI is enabling that, but just being more productive and watching our costs, that's going to be the driver to continue that operating leverage into 2027. Great.

Sean Lee, Analyst — H.C. Wainwright

Thank you again, Paul and David, for joining me for this great chat, and I hope it's been very helpful for our audience as well.

David A. Henry, CFO

Thank you, Sean.