Myomo (MYO) Q2 2026 earnings call transcript

Thank you, Operator, and good afternoon, everyone. This is Vivian Cervantes with Alliance Advisors IR. Welcome to the MIOMO Second Quarter 2026 Financial Results Conference Call. With me today are MIOMO Chief Executive Officer Paul Godonis 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, intent, 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 and 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 SEC.

Actual outcomes and results may differ materially from what's expressed 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, August 5, 2026. It's now my pleasure to turn the call over to Miomo CEO Paul Godona. Paul, please go ahead.

Thanks, Vivian, and good afternoon, everyone. Thank you all for joining us today. Our mission here at Miomo remains straightforward to restore function and independence to people living with chronic arm and hand paralysis. Every day we hear from patients whose lives have been changed by the Myopro, individuals who can once again feed themselves, carry groceries, return to work, or simply use both hands for everyday activities.

This mission and our goal to serve a much larger number of patients continue to guide every decision we make. From a business perspective, the second quarter demonstrated continued progress in executing the strategy we introduced earlier this year. Rather than relying primarily on direct-to-consumer marketing, we're building a more durable and scalable business by evolving our go-to-market strategy, by emphasizing recurrent patient referrals, expanding reimbursement coverage, tightly managing our operational execution, and continuing our market leadership through innovation on our wearable robotics platform.

Importantly, we're seeing measurable progress across all four of our success pillars, which I set out earlier this year. Our first success pillar is the shift to recurring patient sources. Overall revenue for the second quarter increased 21% year over year to $11.7 million, and recurring patient sources represented 53% of total revenue during the quarter. That's double the 26% of revenue from these sources a year ago.

Our shift to recurring patient sources is resulting in an improvement in patient quality as well. The conversion rate of referral leads into pipeline ads is significantly higher than the conversion rate of advertising sourced leads to pipeline ads. We added more than 150 referral sites, bringing us to over 300 active locations, with a growing number already referring a second patient or more.

O&P revenue doubled versus the prior year, and the out-of-block care national rollout is progressing well alongside discussions with other national O&P organizations. Our second success pillar is to increase market access. We've signed additional LVANCE state contracts under our national agreement, further expanding our in-network footprint. Among other payer relationships established in the quarter, we are now in-network with Optum's workers' compensation product, which is a part of UnitedHealthcare. The benefit of being in-network is higher authorization rates from contracted payers.

A still small but growing number of cases we're seeing higher authorization rates compared with non-contracted payers, which demonstrates the value of these agreements in improving patient access and reimbursement efficiency. Meanwhile, we continue to serve a growing number of Medicare Part B patients with a 100% reimbursement rate for patients with a complete medical documentation supporting the delivery of a Myopro to them.

Our third success pillar is to demonstrate operating leverage. As I mentioned, revenue increased 21%, while operating expenses grew only 1%. And we improved our adjusted EBITDA by over $3 million compared to the second quarter of last year. Revenue per employee continues to improve as we implement new systems and efficient processes. In our manufacturing organization, we now have a trained Six Sigma team that has been executing cost reduction initiatives, which include the mobile app rollouts to replace the cost of a laptop reach device.

We're using our new facility here in Burlington, Massachusetts, to expand in-house assembly from outsourced contractors, and we've made a very new investment in 3D printing capabilities. We still remain confident that these and other initiatives will result in expanding margins and lower cash burn. We're demonstrating the ability to grow revenues at a faster rate than operating expenses, which puts us on the path to profitability and sustainable positive cash flows.

Our fourth success pillar is continued progress on product development and clinical research. Development of the next generation MyoPro3 continues on schedule. At the OT World Conference in Germany in May, which is the largest O&P industry event in Europe, we introduced a hand-only prototype for the German market, thus expanding future market opportunities by serving the patient population that needs only a device for hand function.

This is the latest example of building upon our wearable robotics platform, which now includes a cloud-based data collection system and mobile app for communicating with patients and clinicians.

Meanwhile, we're making good progress at the University of Utah Randomized Control Trial, which has enrolled 25 of 50 patients in an updated six-month outcomes publications planned for the second half of this year. As you can see, the key operating metrics continue to move forward in the right direction. We're expanding recurring referral sources, increasing payer access, demonstrating operating leverage, investing in innovation based on our platform, and most importantly, helping more patients regain the use of their arms and hands. and some additional highlights in the quarter as I wrap up my remarks.

The evolution in our go-to-market strategy to recurring patient sources is yielding terrific results, including record quarterly orders, totaling 255 MyoPro units in the second quarter. One example of how the strategy is working is the case of Barbara, who was referred to myoma by her therapist at a major rehab hospital in New Jersey where she'd be attending therapy after her stroke.

Barbara is 14 months post-stroke, and it plateaued with her upper extremity progress. With limited ability to use her right arm, the therapist contacted us as a potential Myopro candidate. After a positive evaluation, her physician provided the necessary medical documentation. Myopro was authorized by her health insurance plan, Blue Cross Blue Shield, within 30 days of the assessment, and she was fit with her custom Myopro within 90 days of the referral. And she's doing well. She making great progress with her therapy and training on how to use her new Myopro She also able to take advantage of our recently released four saddle which will help improve her functional grasp for the activities of daily living which she can now do at home.

Barbara's case exemplifies the effectiveness of our patient referral program, which engages recurring rehabilitation sources at the point of care to advance the patient's return to mobility and independence and can lead to a faster revenue cycle. I'd also like to highlight that we enhanced our board with the appointment of Joe Manco of Horton Capital, one of our largest shareholders, and Will Feb, a seasoned healthcare and medtech executive.

Our expanded board strengthens our governance framework and strategic capabilities by adding directors with significant industry experience, financial expertise, and proven leadership in building shareholder value. With that overview, I'll now turn the call over to Dave Henry to review our financial results in greater detail.

Thank you, Paul, and good afternoon, everyone. As Paul just discussed, our go-to-market evolution continues to gain traction, and I'm pleased to report another quarter of solid financial and operational execution. Our revenue for the second quarter of 2026 was $11.7 million, up 21% versus the prior year period. The increase was driven by both a higher average selling price, or ASP, and a higher number of revenue units.

ASP for the quarter was approximately $55,500, up about 2% versus the prior year, and we recognize revenue on 211 Myopro units, an increase of 19% over the second quarter of 2025. Looking at payer mix, Medicare Part B patients represented 50% of second quarter revenue, compared with 56% in the prior year period. Medicare Advantage plans represented 16% of second quarter revenue, compared with 20% in the prior year period.

Our transition toward recurring patient sources continued to accelerate during the quarter. Recurring patient sources represented 53% of second quarter revenue, compared with 26% in the prior year quarter, achieving our objective of 50% of revenues from recurring patient sources six months ahead of schedule. Within these recurring channels, 23% of total revenue was generated by direct billing referrals through our MyoConnect program, up from 20% in the first quarter. We also continue to see strong momentum from our other recurring channels, with international revenue representing 17% of revenue, growing 32% year-over-year, and the USOMP channel representing 10% of revenue, growing 130% year-over-year.

VA patients represented 3% of revenue in the second quarter. Turning to our metrics, we received a record of 255 MyoPro orders during the quarter, up 23% year-over-year. Higher conversion of orders to revenue affects the efficiency of our operations as 57% of second quarter revenue units came from orders received during the quarter. We added 739 patients to the pipeline during the quarter, up 2% sequentially.

Advertising spending was up 11% sequentially. Pipeline ads in the quarter were impacted by maintenance activities on our website, which resulted in a temporary pause in data sharing with our digital ad agency. Those activities have been completed, and the website is functioning normally. Patient quality in the pipeline is improving, however, as 17% of pipeline ads in the second quarter were generated by direct billing referrals, which is reflective of our progress in adding referring sites, and is an increase of 11% in the first quarter.

To illustrate the impact of MyoConnect, typically about 25% of our pipeline ads on a quarterly basis are Medicare patients. Looking at only MileConnect pipeline ads so far in 2026, roughly 50% of patients entering the pipeline are Medicare patients. As a result, increasing direct billing referrals combined with our continuing marked assets efforts are improving patient quality and are starting to translate into a higher authorization rate as well.

We ended the quarter with a backlog of 218 patients down modestly from the first quarter as higher revenue velocity offset stronger order growth. Turning to our financial results, gross margin for the second quarter was 72.1%, up from 62.7% in the prior year quarter. The improvement was driven primarily by the higher ASP, lower overhead spending, and the favorable impact of material cost reductions, including the rollout of the Myoma mobile app, partially offset by somewhat higher clinical costs reclassified to cost of goods sold.

Operating expenses were $10.7 million, representing an increase of less than 1% compared with the second quarter of 2025. Higher general and administrative expenses offset lower advertising and R&D spending.

Operating loss improved significantly to $2.3 million compared with $4.6 million in the prior year quarter. The adjusted EBITDA improved to a loss of $800,000 compared with a loss of $4 million a year ago, representing a 79% year-over-year improvement. Note that a portion of the improvement in the adjusted EBITDA is due to higher stock-based compensation expense as certain employee incentive payments were paid in stock during the quarter as part of our cash management initiatives. Low operating loss, second quarter results include a non-cash charge of approximately $1.2 million related to a marked adjustment on the valuation of our derivative liabilities, as well as cash and non-cash interest expense associated with the Avenue Capital Term Loan.

Including these non-cash charges, net loss for the quarter was $4 million, or $0.09 a share, compared with $4.6 million, or $0.11 per share, in the second quarter of 2025. Turning now to our balance sheet and cash flow. As of June 30, 2026, cash, cash equivalents, and short-term investments totaled $13.5 million. Cash used in operating activities during the second quarter was $1.9 million, a substantial improvement compared with $8.9 million used in the second quarter of 2025.

Prior year cash burn was impacted by a temporary payment hold imposed by the D&D Max and payment of 2024 incentive payments in cash.

Let me conclude with our outlook. For the third quarter, we expect revenue to be in the range of $11.5 million to $12 million, representing 14% to 19% year-over-year growth. Given the strong first-half performance and continued momentum across the business, we're raising our full-year revenue guidance to a range of $45 million to $47 million, up from our previous guidance of $43 million to $46 million.

We expect a modest sequential increase in operating expenses in the third quarter. We're also maintaining our previously communicated operating leverage objective to limit the growth of operating expenses in 2026 to half the rate of revenue growth. In addition, we expect total cash burn during the second half of the year to be less than $2 million. Overall, we're very pleased with the progress we're making. The evolution of our go-to-market approach, continued improvement in operating leverage, and strong execution position as well for the balance of 2026.

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 the key financial metrics including gross margin, adjusted EBITDA, and cash usage. We now delivered over 3 devices to patients and our technology platform is making a dramatic difference in their lives And while we established MyOmo as the market leader in addressing this large unmet need we still at the early stage of market penetration with a prevalence population of hundreds of thousands of qualified individuals who are suffering with chronic arm paralysis and tens of thousands more each year going through rehab clinics that could be potential Myopro candidates as well. And now Dave and I are ready to take your questions.

Operator?

You're right. We see the MyoConnect program really gaining momentum here. We are adding more sites, up to 300 referral sites. And what we're seeing is, as Dave mentioned, not only better medically qualified patients, because the therapists have been informed by us who makes a good MyoPro candidate, they tend to have better insurance. So the larger percentage of them have Medicare Part B, which is easier to get reimbursed for that patient. So that MyoConnect program is really driving the growth. But we also have some other growth drivers.

Our O&P business is growing. In fact, we'll be at the AOPA National Conference next month to continue building relationships over there. And Europe is growing strongly as well. So we've got multiple growth drivers going on over here. I think Dave can answer your question about the pipeline.

Yeah, there were, as I mentioned, there were 17% of our pipeline ads in the quarter were from the Mile Connect referrals. That was up from 11% in the first quarter. And so that was, you know, that's about 122, I believe, referrals, referral pipeline ads.

Well, I believe the answer to the second part is all of the above. I think we'll be able to go with our chief medical officer to medical directors at various payers and make the case that the Myoprobe is not experimental, it's not investigational, it's proven, it's being covered by Medicare and other payers. Thousands of people are already benefiting from it. And here's more research data about it. As I mentioned, we have 25 of the 50 patient subjects already in the study. We'll do a readout at six months. And then we expect the full publication sometime in 2027.

Great.

Same thing, yes.

Scott, it's a combination of insurance authorizations that we get from our direct billing operation, and then orders, POs, we get from an O&P provider or a PO from a VA.

Yeah, the overall pipeline at the end of the quarter was 1,491 patients.

Yeah, I mean, remember, with all of the challenges trying to get Medicare Advantage patients authorized, a lot of them stick in the pipeline a while. So I think looking at pipeline ads, because they're sort of closer, particularly as we migrate towards MyoConnect, I think that's probably a better metric to kind of look at instead of, you know, the overall pipeline and who might be stuck in there, you know, longer term.

So I would focus on the pipeline ads.

Yeah. And as I mentioned, that 739 included the 122 referral pipeline ads, and as I said, so far this year, roughly half of MyoConnect pipeline ads are Medicare. So that compares with 25% for the overall program, which is driven by the advertising. So we're seeing much better patients under Myoconnect, ones that have fewer contraindications. They're closer to their pre-stroke life.

It's easier to obtain their reimbursement documents. And, oh, by the way, more of them are Medicare. So that really kind of explains why we're doing what we're doing.

Well, typically, fourth quarter of every year, we tend to scale back the direct-to-consumer advertising for some of the reasons you mentioned, Scott. This year, it's an election year, so there's more competition for those eyeballs. There's also the holiday advertising that we have to deal with and so on. So that's why we're going to keep emphasizing our MyoConnect program. We're growing the number of people in the field with sales and clinical expertise to build more referral sites. and that's pretty immune from the advertising aspects.

It might be easier to answer the question. So, you know, we've given, you know, the revenue guidance. You know, the gross margin, you know, we were at 72%. I don't know why that would go down. We are, you know, cost reductions continue apace. We have more that are planned that will reduce manufacturing costs here in the second half of the year.

And, you know, typically, you know, second-half revenues are stronger than first-half revenues, so we will get the leverage impact of that. Then in terms of the operating expenses, I said that we would expect some modest operating expense growth in the third quarter. And then fourth quarter, I mean, it's not going to – I don't expect fourth quarter to be higher than third.

And so I would expect it to be, you know, along those same lines, I would say. And so that should then translate into sort of improvement in operating loss as we go through the rest, as we finish up the year here with, you know, presumably given our full year guidance, you know, that does sort of lead to higher fourth quarter revenue.

Yeah, I would expect that, you know, part of the modest increase in operating expenses is an expected increase in ad spending in third quarter. It's something we typically do before we take our foot off the gas on advertising spending. a little bit in the fourth quarter. Advertising spending is still an important part of what we're doing, and the advertising-driven revenues are still an important part of what we're doing. So we're not – I just want to make sure that people understand we're not turning those off. It's going to be an important part of our business on an ongoing basis.

We just want to see a greater mix of revenues coming from recurring patient sources.

I think as we look forward to the end of the year, I mean, we had a goal of 50. I think 55% probably might be a reasonable number to exit the end of the year. And then longer term, I think we're going to be in a position where MyoConnect is starting to mature here as we get toward the end of the year. So maybe a 60-40-ish kind of split, something like that, longer term, might be where we land.

There are several thousand stroke rehab clinics around the country, whether they're affiliated with major hospitals like Spalding Rehab here in Boston or Kessler and so on. But there's a lot of smaller neuroclinics around the country that see stroke patients. So we're just at the early stage of this. And the MyoConnect program has two growth sectors. One, increased penetration, more awareness by the therapists and the doctors at these rehab clinics. but also kind of what I'll call same-store sales growth. You know, we're already starting to see that after their first referral, they'll make a second referral, and hopefully over time, as they see their patients benefiting from the myoprobe, we'll see an increasing number of referrals per site.

So I see two drivers here that kind of lead to exponential growth, more referral sites, and then more patients referred per site over time. The same thing with the O&P clinics. Yeah, O&P clinics, the revenue is still relatively small out of the total mix. I mean, there are several thousand O&P clinics around the country. We have regular meetings with the senior executives of the ones that have been put together as national players, and we're looking to increase our penetration among their clinicians and offices and continuing to find more entrepreneurial OT clinics around the country as well. So that's another growth factor, not only here in the U. S. , but also in Germany.

You're welcome.

Well, it's a very exciting new product development, and I was over in Leipzig, Germany, in May, with our team introducing this prototype, which is under development. The reason we're starting in Germany is because a hand-only product will be reimbursed in Germany. There's already a small competitor, HKK, which already has a hand-only device. We're bringing our technology platform to build a superior device to that, and we know it will get reimbursed in Germany, so we're starting there. And then we can work on how we get the appropriate HCPCS codes here in the U. S. to support rollout here in the U. S. because there's certainly a patient demand for people who can move their upper arm, but they don't have the distal function.

So this would be available and expands our adjustable market with this new product off our technology platform.

We will be covering that in our OPEX plans here. You know, it's not a major redo of the product. It's really taking off the turbo motor, re-investing away with sensors and power of the unit. So it's a relatively small R&D investment compared to the MyoPro3.

Thank you, Ed.

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