Myomo(US:MYO)2025-05-07 20:15PART I Item 1. Financial Statements The company reported a 162% revenue increase to $9.8 million in Q1 2025, alongside a $3.5 million net loss and a decrease in cash to $19.8 million Condensed Consolidated Balance Sheets Total assets decreased to $40.9 million by March 31, 2025, primarily due to reduced cash, while liabilities increased and equity declined Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Cash and cash equivalents | $19,794 | $24,372 | | Accounts receivable, net | $4,663 | $3,825 | | Total Current Assets | $31,097 | $32,800 | | Total Assets | $40,867 | $42,244 | | Total Current Liabilities | $11,675 | $10,172 | | Total Liabilities | $19,180 | $17,530 | | Total Stockholders' Equity | $21,687 | $24,714 | Condensed Consolidated Statements of Operations Q1 2025 revenue surged 162% to $9.8 million, with gross profit rising to $6.6 million, and net loss narrowing to $3.5 million Q1 2025 vs. Q1 2024 Statement of Operations (in thousands) | Metric | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Product revenue | $9,832 | $3,754 | | Gross profit | $6,610 | $2,299 | | Loss from operations | $(3,520) | $(3,889) | | Net loss | $(3,465) | $(3,836) | | Net loss per share | $(0.08) | $(0.10) | Condensed Consolidated Statements of Cash Flows Net cash used in operating activities improved to $2.7 million in Q1 2025, but overall cash decreased by $4.6 million due to investing and lower financing Cash Flow Summary for the Three Months Ended March 31 (in thousands) | Activity | 2025 | 2024 | | :--- | :--- | :--- | | Net cash used in operating activities | $(2,677) | $(3,246) | | Net cash used in investing activities | $(1,896) | $(3,543) | | Net cash (used in) provided by financing activities | $(37) | $5,362 | | Net (decrease) in cash | $(4,579) | $(1,437) | Notes to Unaudited Condensed Consolidated Financial Statements Notes detail liquidity, revenue recognition, financing, and customer concentration, with CMS representing 59% of Q1 2025 revenue despite a $3.5 million net loss - The company is a wearable medical robotics company that develops and sells the MyoPro®, a myoelectric upper limb orthosis, directly to patients and through various providers25 - Despite a Q1 2025 net loss of approximately $3.5 million and negative operating cash flow of $2.7 million, management believes its current cash, investments, and expected cash flows will fund operations for at least the next twelve months2627 - The company has access to a $4.0 million revolving line of credit and a $3.0 million term loan facility from Silicon Valley Bank, both of which were undrawn as of March 31, 2025287477 Revenue by Source (in thousands) | Source | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Direct to patient | $7,808 | $2,235 | | Clinical/Medical providers | $2,024 | $1,520 | | Total revenue | $9,832 | $3,754 | - Revenue from the United States constituted 87% of total revenue in Q1 2025, up from 75% in Q1 2024. Revenue from Germany decreased to 13% from 22% over the same period49 - For Q1 2025, the Centers for Medicare & Medicaid Services (CMS) represented 59% of product revenues. At March 31, 2025, CMS accounted for 46% of accounts receivable9091 Management's Discussion and Analysis of Financial Condition and Results of Operations Management attributes 162% Q1 2025 revenue growth to direct billing and Medicare Part B, improving gross margin to 67.2% despite rising operating expenses and anticipated negative cash flows Results of Operations Q1 2025 revenue grew 162% to $9.8 million, driven by direct billing, with gross margin expanding to 67.2% and adjusted EBITDA loss improving to $2.8 million Q1 2025 vs. Q1 2024 Financial Performance | Metric | Q1 2025 | Q1 2024 | Change ($) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Product revenue | $9,831,814 | $3,754,389 | $6,077,425 | 162% | | Gross profit | $6,609,630 | $2,299,044 | $4,310,586 | 187% | | Gross margin % | 67.2% | 61.2% | N/A | 6.0% | | Total operating expenses | $10,129,884 | $6,187,811 | $3,942,073 | 64% | - The revenue increase was primarily driven by higher direct billing revenues, which accounted for 79% of product revenue in Q1 2025, up from 60% in Q1 2024. This was due to a higher average selling price (ASP) and higher volume from serving Medicare Part B beneficiaries104 - Operating expenses increased across the board: R&D rose 87% due to accelerated development efforts, SC&M increased 86% from higher clinical headcount and advertising, and G&A grew 37% from increased reimbursement and HR staff111113115 Reconciliation of Net Loss to Adjusted EBITDA (in thousands) | Line Item | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | GAAP net loss | $(3,465) | $(3,836) | | Interest income, net | $(192) | $(135) | | Depreciation expense | $158 | $30 | | Stock-based compensation | $540 | $320 | | Income tax expense | $137 | $82 | | Adjusted EBITDA | $(2,822) | $(3,539) | Liquidity and Capital Resources As of March 31, 2025, the company held $21.5 million in cash and investments, believing it has sufficient liquidity for 12 months despite anticipated negative cash flows from strategic investments Liquidity Position | Metric | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Cash and cash equivalents | $19,793,799 | $24,372,373 | | Short-term investments | $1,730,460 | $492,990 | | Total | $21,524,259 | $24,865,363 | | Working capital | $19,422,008 | $22,618,158 | - The company has historically funded operations through equity and debt, including a $15.8 million net proceeds public offering in December 2024 and a $5.4 million net proceeds offering in January 2024125 - Operating plans are focused on growing the direct billing channel, which will involve increased spending and is expected to result in negative cash flows for at least the first three quarters of 2025126 Critical Accounting Estimates The most critical accounting estimate is revenue recognition, particularly for commercial insurance payers where timing depends on historical payment data or cash receipt - The most critical accounting estimate is the timing and amount of revenue recognition, which depends on estimates of payments from insurance payers133 - For Medicare Part B, revenue is recognized upon delivery based on published CMS fees. For commercial insurers, revenue is recognized upon delivery only if sufficient payment history exists; otherwise, it is recognized upon cash receipt134 Item 3. Quantitative and Qualitative Disclosures About Market Risk This section is not applicable as the company qualifies as a smaller reporting company - This item is not applicable to the company as it is a smaller reporting company136 Item 4. Controls and Procedures Management concluded disclosure controls were ineffective as of March 31, 2025, due to a material weakness in IT general controls, with a remediation plan underway - Management concluded that disclosure controls and procedures were not effective as of March 31, 2025, due to a material weakness in internal control over financial reporting140148 - The material weakness relates to a lack of design and maintenance of effective information technology (IT) general controls, including issues with privileged access rights, user provisioning, and change management for the financial reporting system142 - A remediation plan is in progress to formalize IT processes. Changes to access rights and change management procedures were implemented in Q1 2025, with more enhancements planned for Q2 2025144145 - Despite the material weakness, management has concluded that the condensed consolidated financial statements included in the report are fairly presented in all material respects143 PART II Item 1. Legal Proceedings The company is not currently involved in any material litigation requiring disclosure - There is no material litigation against the Company at this time that is required to be disclosed151 Item 1A. Risk Factors Key risks include reduced Medicare Advantage revenues, negative impact from social media algorithm changes on lead generation, and potential U.S. tariffs - A significant risk is the reduction in authorizations from Medicare Advantage plans, which has negatively impacted revenues. These plans accounted for only 17% of product revenue in Q1 2025, down from 38% in Q1 2024153 - The company's lead generation efforts were adversely affected in Q1 2025 by an algorithm change at a social media advertising company, which is expected to negatively impact revenue growth in Q2 2025154 - Potential U.S. tariffs on imports are identified as a risk, though the company estimates the impact on 2025 gross margin would be less than 100 basis points (1%) if fully implemented155 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds from Registered Securities The company reported no unregistered sales of equity securities during the period - None157 Item 5 Other Information CFO David A. Henry adopted a Rule 10b5-1 trading plan on March 12, 2025, for the potential sale of up to 129,020 shares of common stock - On March 12, 2025, CFO David A. Henry adopted a Rule 10b5-1 trading plan to sell up to 129,020 shares of common stock158 Item 6. Exhibits This section lists exhibits filed with the Form 10-Q, including corporate governance documents, material contracts, and certifications - This section lists the exhibits filed with the Form 10-Q, including charter documents, the First Amendment to the Loan and Security Agreement, and Sarbanes-Oxley certifications160161