MYO | Myomo Inc. | earnings call 2026-09-15
Verbatim transcript (source: faster-whisper-small.en)

I expect in a couple years we'll have a thousand of these locations, referring patients to us on a regular basis. A couple of the data points around that too, just to illustrate the benefit of marketing more towards that incidence population first, under direct to 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. But with the program that we call mild connect, which is the referral ecosystem that we're trying to build, 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 cash flow break even point, which is around, you know, on a free cash flow basis around 15 million dollars of revenue per quarter. Secondly, 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 percent of the leads we generate are Medicare, but then under the mild connect referral program we're finding that of the pipeline as we get about half of them are Medicare where reimbursement is more certain. So those are very, you know, those are tangible benefits to what we're doing and this is why we're seeing some of the results we're seeing. Great, thank you for that. You mentioned that you know the company now has over 300 referral sites, most of them added over the last three to six months even. So what do you have a going mind and how many referral sites you want to hit and what percentage of these sites have started, you know, multiple referrals I guess? So there are several thousand of these 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. And so when you add it all up it's several thousand so you know we're 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 field therapists, doctors will refer the next several patients. So we've already seen 15 to 20 percent of these facilities referring a second or third patient and so on. So I see two growth factors here, more locations and then more units per year per location. So that's why we think you know it will see accelerated growth going forward. 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 percent over the last year. So my question is you know what's driving this growth and I know you guys also signed a deal with the Autobot Care recently. So what can we, 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? Well I'll let Dave talk the economics. We just came back from the National Pathology and Prosthetic 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 weren't amputee because they have prosthetics, 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 US. As you mentioned Autobot, big prosthetics company out of Germany. They've bought about 80 to 90 locations in the US. Osir integrated forward. They have now their four motion clinics. So we met with the senior executives of all these organizations and now that we introduced the new product the MyoPro 2x last year plus with the Medicare reimbursement plus you'll see all the clinical research supporting the device. Now they're beginning to adopt this. So they'll grow over 100 percent year over year off of small base but these they see all these stroke patients every year because 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 lookup because 82 percent of those patients who've had a stroke that get an AFO for their foot also have armored parents and so encouraging them to look and it's a very attractive economics for them as you know Dave can discuss. Yeah I mean the SP for our device as the fee for Medicare is a little over 68 thousand dollars. So the OMP channel when we provided device through that the you know 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 you know they're you know it's one of the highest revenue value per unit opportunities that are in the OMP channel today which is the MyOpro. 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? Yeah they mean under the direct-to-patient advertising our cost per our advertising cost per pipeline ad has been around $2,500 per patient or per pipeline ad. Overall when you 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 this of that with combined with same-store sales if you will that Paul mentioned earlier should drive that cost down. I see. 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 manufacturer ability and also where do you see the long-term margin to reach? Yeah so the in second quarter as Sean mentioned 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 the CMS price increase that went into effect at the beginning of 2026 so it's around 2%. Roughly I'm gonna say 70 to 80 basis points of that increase came from material cost savings. For example we've you know we now have an app that we have now that is replacing a laptop that we use to provide for every patient. That laptop will cost about $500 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 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.