4
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
(Mark One)
For the quarterly period ended
or
For the transition period from to .
Commission File Number
(Exact name of Registrant as Specified in its Charter)
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(State or Other Jurisdiction of |
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(I.R.S. Employer |
Incorporation or Organization) |
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Identification No.) |
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(Address of principal executive offices) |
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Registrant’s Telephone Number, Including Area Code
Securities registered pursuant to Section 12(b) of the Act:
Title of each class |
Trading Symbol(s) |
Name of each exchange on which registered |
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer |
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Accelerated filer |
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Smaller reporting company |
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Emerging growth company |
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If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ☐ No
At May 2, 2025, the registrant has
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
This Quarterly Report on Form 10-Q includes forward-looking statements. Forward-looking statements relate to expectations, beliefs, projections, future plans and strategies, anticipated events or trends and similar matters that are not historical facts. In some cases, you can identify forward-looking statements by terms such as “anticipate,” “believe,” “could,” “estimate,” “expect,” “intend,” “may,” “plan,” “potential,” “should,” “will” and “would” or the negatives of these terms or other comparable terminology.
You should not place undue reliance on forward looking statements. The cautionary statements set forth in this Quarterly Report on Form 10-Q, including in “Risk Factors” and those contained in our Annual Report on Form 10-K filed with the United States Securities and Exchange Commission on March 10, 2025 and elsewhere, identify important factors which you should consider in evaluating our forward-looking statements. These factors include, among other things:
Although the forward-looking statements in this Quarterly Report on Form 10-Q and those contained on in our Annual Report on the Form 10-K for the year ended December 31, 2024, are based on our beliefs, assumptions and expectations, taking into account all information currently available to us, we cannot guarantee future transactions, results, performance, achievements or outcomes. No assurance can be made to any investor by anyone that the expectations reflected in our forward-looking statements will be attained, or that deviations from them will not be material and adverse. We undertake no obligation, other than as may be required by law, to re-issue this Quarterly Report on Form 10-Q, or otherwise make public statements updating our forward-looking statements.
TABLE of CONTENTS
Part 1. FINANCIAL INFORMATION
Item 1. Financial statements
MYOMO, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
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March 31, |
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December 31, |
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2025 |
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2024 |
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(unaudited) |
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ASSETS |
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Current Assets: |
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Cash and cash equivalents |
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$ |
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$ |
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Short-term investments |
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Accounts receivable, net |
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Inventories, net |
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Prepaid expenses and other current assets |
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Total Current Assets |
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Restricted Cash |
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Operating lease assets with right of use, net |
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Equipment, net |
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Other assets |
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Total Assets |
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$ |
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$ |
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LIABILITIES AND STOCKHOLDERS’ EQUITY |
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Current Liabilities: |
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Accounts payable and accrued expenses |
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Current operating lease liability |
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Income taxes payable |
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Deferred revenue |
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Total Current Liabilities |
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Non-current operating lease liability |
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Total Liabilities |
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Commitments and Contingencies |
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Stockholders’ Equity: |
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Preferred stock, $ |
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Common stock par value $ |
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Additional paid-in capital |
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Accumulated other comprehensive loss |
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Accumulated deficit |
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Treasury stock, |
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Total Stockholders’ Equity |
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Total Liabilities and Stockholders’ Equity |
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$ |
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$ |
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The accompanying notes are an integral part of the condensed consolidated financial statements.
1
MYOMO, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited)
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For the Three Months Ended |
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March 31, |
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2025 |
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2024 |
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Revenue |
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Product revenue |
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$ |
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$ |
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Cost of revenue |
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Gross profit |
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Operating expenses: |
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Research and development |
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Selling, clinical and marketing |
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General and administrative |
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Loss from operations |
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Other (income) expense, net |
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Interest income, net |
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Loss before income taxes |
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Income tax expense |
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Net loss |
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$ |
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$ |
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Weighted average number of common shares outstanding: |
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Basic and diluted |
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Net loss per share attributable to common stockholders |
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Basic and diluted |
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$ |
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$ |
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The accompanying notes are an integral part of the condensed consolidated financial statements.
2
MYOMO, INC.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS (unaudited)
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For the Three Months Ended |
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March 31, |
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2025 |
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2024 |
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Net loss |
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$ |
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$ |
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Foreign currency translation adjustments |
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Other comprehensive (loss) income |
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Comprehensive loss |
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$ |
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$ |
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The accompanying notes are an integral part of the condensed consolidated financial statements.
3
MYOMO, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY (unaudited)
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For the Three Month Period Ending March 31, 2025 and 2024 |
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Common stock |
Additional |
Accumulated Comprehensive |
Accumulated |
Treasury Stock |
Total |
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Amount |
Capital |
(Loss) Income |
Deficit |
Shares |
Amount |
Equity |
Balance, December 31, 2024 |
$ |
$ |
$( |
$( |
$( |
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Common stock issued upon vesting of restricted stock units |
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— |
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Common stock issued upon vesting of incentive stock options |
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Stock-based compensation |
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Unrealized loss on foreign currency adjustments |
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Net loss |
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( |
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— |
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Balance, March 31, 2025 |
$ |
$ |
$( |
$( |
$( |
$ |
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Balance, December 31, 2023 |
$ |
$ |
$ |
$( |
$( |
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Proceeds from sale of common stock in registered direct offering, net of offering costs of $ |
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Proceeds from sale of |
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Common stock issued upon vesting of restricted stock units |
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Stock-based compensation |
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Unrealized gains on foreign currency adjustments |
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Net loss |
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( |
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Balance, March 31, 2024 |
$ |
$ |
$ |
$( |
$( |
$ |
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The accompanying notes are an integral part of the consolidated financial statements.
4
MYOMO, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited)
For the Three Months Ended March 31, |
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2025 |
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2024 |
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CASH FLOWS FROM OPERATING ACTIVITIES |
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Net loss |
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$ |
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$ |
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Adjustments to reconcile net loss to net cash used in operations: |
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Depreciation |
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Stock-based compensation |
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Accretion of discount on short-term investments |
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Credit losses |
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Amortization of deferred debt origination cost |
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Amortization of right-of-use assets |
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Other non-cash changes |
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Changes in operating assets and liabilities: |
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Accounts receivable |
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Inventories |
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Prepaid expenses and other current assets |
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Other assets |
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Accounts payable and accrued expenses |
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Operating lease liabilities |
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Deferred revenue |
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Income taxes payable |
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Net cash used in operating activities |
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CASH FLOWS FROM INVESTING ACTIVITIES |
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Purchases of equipment |
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Maturities of short-term investments |
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Purchases of short-term investments |
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Net cash provided by (used in) investing activities |
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CASH FLOWS FROM FINANCING ACTIVITIES |
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Deferred debt origination costs |
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Net proceeds from common stock offering |
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Proceeds from sale of pre-funded warrants, net of offering costs |
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Net cash (used in) provided by financing activities |
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Effect of foreign exchange rate changes on cash |
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Net increase in cash and cash equivalents |
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Cash and cash equivalents beginning of year |
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Cash, cash equivalents and restricted cash end of year |
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$ |
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$ |
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The accompanying notes are an integral part of the condensed consolidated financial statements.
5
MYOMO, INC.
NOTES TO CONDENSED CONSOLIDATED UNAUDITED FINANCIAL STATEMENTS
Note 1 — Description of Business
Myomo Inc. (“Myomo” or the Company”) is a wearable medical robotics company that develops, designs, and produces myoelectric orthotics for people with neuromuscular disorders. The MyoPro ® myoelectric upper limb orthosis product is registered with the U.S. Food and Drug Administration as a Class II medical device. The Company sells its products directly to patients, to Orthotics and Prosthetics ("O&P") providers around the world, the Veterans Health Administration, and distributors in Europe and Australia. The Company was incorporated in the State of Delaware on September 1, 2004 and is headquartered in Boston, Massachusetts.
Note 2 — Liquidity
The Company incurred net losses of approximately $
Based upon its current cash, cash equivalents, and short-term investments, as well as the future expected cash flows, the Company believes that its available cash, cash equivalents, and short-term investments will fund its operations for at least the next twelve months from the issuance date of these financial statements.
The Company has historically funded its operations through financing activities, including raising equity and debt. On December 6, 2024, the Company completed a public offering, selling
Management's operating plans are primarily focused on growing revenues in its direct billing channel, while working to grow revenues in its O&P channel. These plans include increasing advertising spending and adding headcount to support growth in its clinical, reimbursement, and manufacturing capacity in order to serve a higher volume of patients in 2025. These investments are expected to result in negative cash flows for at least the first three quarters of 2025. In addition, the Company believes that it has access to capital resources through possible public or private equity offerings, debt financings, or other means. Debt financing may contain other terms that are not favorable to the Company or its stockholders.
Note 3 — Summary of Significant Accounting Policies
Interim Financial Statements
The accompanying unaudited condensed consolidated financial statements and notes are representations of the Company’s management, who are responsible for their integrity and objectivity. These statements have been prepared in accordance with United States generally accepted accounting principles ("U.S. GAAP") for interim financial information pursuant to Regulation S-X. Accordingly, they do not include all of the information and disclosures required by U.S. GAAP for annual financial statements. In the opinion of management, such statements include all adjustments (consisting only of normal recurring items) that are considered necessary for a fair presentation of the condensed consolidated financial statements of the Company as of March 31, 2025 and for the three months ended March 31, 2025 and 2024. The results of operations for the three months ended March 31, 2025 are not necessarily indicative of the operating results for the fiscal year ending December 31, 2025, or any other period. These condensed consolidated financial statements should be read in conjunction with the audited financial statements and related disclosures of the Company as of December 31, 2024 and 2023 and for the years then ended, included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2024.
Basis of Consolidation
The condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiary Myomo Europe GmbH. All significant intercompany balances and transactions are eliminated.
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Comprehensive Income (Loss)
Comprehensive loss includes all changes in equity during a period, except those resulting from investments by stockholders and distributions to stockholders. The Company's comprehensive loss includes changes in foreign currency translation adjustments and unrealized gains and losses on short term investments. There was a reclassification which management does not consider to be material out of accumulated other comprehensive income (loss) to other (income) expense related to realized gains or losses on short-term investments in the three months ended March 31, 2025. There were no reclassifications in the three months ended March 31, 2024.
Use of Estimates
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America require management to make estimates and assumptions that affect certain reported amounts and disclosures. These estimates and assumptions are reviewed on an on-going basis and updated as appropriate. Actual results could differ from these estimates. The Company’s estimates include assertion of collectability with payers where the Company has no contracts as it relates to timing of revenue recognition and discount rate of leases.
Cash, Cash Equivalents and Short-Term Investments
The Company considers all highly liquid investments with an original maturity of three months or less when purchased to be cash equivalents. Cash and cash equivalents consist principally of deposit accounts and money market accounts at March 31, 2025 and December 31, 2024.
The Company considers all investments with an original maturity of greater than three months but less than one year to be short-term investments. Short-term investments as of March 31, 2025 and December 31, 2024 consists of U.S. Treasury Bills and U.S. Government Agency Bills, which are classified as held-to-maturity, totaling approximately $
The Company’s cash balances as of March 31, 2025 and December 31, 2024 consist of the following:
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March 31, |
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December 31, |
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Cash and cash equivalents |
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$ |
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$ |
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Restricted cash |
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Total cash, cash equivalents, and restricted cash |
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$ |
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$ |
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Accounts Receivable and Allowance for Credit Losses
The Company reports accounts receivable at invoiced amounts less an allowance for credit losses accounts. The Company evaluates its accounts receivable on a continuous basis and, if necessary, establishes an allowance for credit losses based on a number of factors, including current credit conditions and customer payment history. The Company does not require collateral or accrue interest on accounts receivable and credit terms are generally 30 days. At March 31, 2025, and December 31, 2024, the Company recorded an allowance for credit losses accounts of approximately $
Revenue Recognition
The Company accounts for revenue under ASC 606, “Revenue from Contracts with Customers” and all of the related amendments (Topic 606). Revenues under Topic 606 are required to be recognized either at a “point in time” or “over time,” depending on the facts and circumstances of the arrangement and are evaluated using a five-step model. Generally, the Company recognizes revenue at a point in time.
The Company recognizes revenue after applying the following five steps:
7
Revenue is recognized when control of these services is transferred to our customers, in an amount that reflects the consideration the Company expects to be entitled to in exchange for those services.
Product Revenue
Increasingly, the Company derives its revenue from direct billing. The Company also derives revenue from the sale of its products to O&P providers in the United States and internationally and the Veterans Administration (“VA”). Under direct billing, the Company recognizes revenue when all of the following criteria are met:
For revenue derived from patients with Medicare Part B, the Company recognizes revenue upon delivery of the device to the patient based on the published fees by the Centers for Medicare & Medicaid Services ("CMS"). With respect to patients with Medicare Advantage or other commercial insurance, for payers where the Company either has a contract or in the absence of a contract, has demonstrated sufficient payment history, the Company will recognize revenue when it receives a pre-authorization from the insurance company and control passes to the patient upon delivery of the device in an amount that reflects the consideration the Company expects to receive in exchange for the device. During the three months ended March 31, 2025 and 2024, the Company made such a determination for certain insurers. These insurers represented approximately
Depending on the timing of product deliveries to customers, which is when cost of revenue must be recorded, and when the Company meets the criteria to record revenue, there may be fluctuations in gross margin. During the three months ended March 31, 2025 and 2024, the Company recognized revenue of approximately $
For revenues derived from O&P providers and the VA, the Company recognizes revenue when control passes to the customer in an amount that reflects the consideration the Company expects to receive in exchange for those services. Revenues may be recognized upon shipment or upon delivery, depending on the terms of the arrangement, provided that persuasive evidence of an arrangement exists, there are no uncertainties regarding customer acceptance and collectability is deemed probable.
The Company has elected to record taxes collected from customers on a net basis and does not include tax amounts in revenue or cost of revenue.
Contract Balances
The timing of revenue recognition may differ from the timing of payment by customers. The Company records a receivable when revenue is recognized prior to payment and there is an unconditional right to payment. Alternatively, when payment precedes the provision of the related services, the Company records deferred revenue until the performance obligations are satisfied. The Company had deferred revenue of approximately $
Disaggregated Revenue from Contracts with Customers
The following table presents revenue by major source:
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For the Three Months |
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2025 |
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2024 |
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Direct to patient |
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$ |
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$ |
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Clinical/Medical providers |
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Total revenue from contracts with customers |
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$ |
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$ |
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8
Geographic Data
The Company generated
Cost of Revenue
Advertising
The Company charges the costs of advertising to operating expenses as incurred. Advertising expense amounted to approximately $
Foreign Currency Translation
The functional currency of the Company’s foreign subsidiary, Myomo Europe GmbH, is the Euro. Foreign exchange translation gains and losses from the Euro to U.S. dollars are included in other comprehensive gain. The Company recorded a comprehensive loss of approximately $
Net Loss per Share
Basic net loss per common share is computed by dividing net loss attributable to common stockholders by the weighted average number of common shares outstanding during the period. Diluted net loss per common share is computed by dividing net loss attributable to common stockholders by the weighted average number of common shares outstanding, plus potentially dilutive common shares. Restricted stock, restricted stock units, stock options and warrants are excluded from the diluted net loss per share calculation when their impact is antidilutive. The Company reported a net loss for the three months ended March 31, 2025 and 2024, and as a result, all potentially dilutive common shares are considered antidilutive for these periods.
Potential dilutive common shares issuable consist of the following at:
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March 31, |
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2025 |
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2024 |
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Stock options |
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Restricted stock units |
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Other warrants |
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Total |
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Due to their nominal exercise price of $
Recently Adopted Accounting Standards
In October 2023, the FASB issued ASU 2023-06, “Disclosure Improvements, Codification Amendments in Response to the SEC’s Disclosure Update and Simplification Initiative”, that adds 14 of the 27 identified disclosure or presentation requirements to the Codification, each amendment in the ASU will only become effective if the SEC removes the related disclosure or presentation from its existing regulations by
June 30, 2027. The Company currently complies with these disclosure requirements as applicable under Regulation S-X or Regulation S-K and will adopt these new standards depending on timing of when they become effective, which is not expected to have a material impact on its financial position and results of operations.
9
In December 2023, the FASB issued ASU 2023-09, “Accounting Standards Update, Income Taxes (Topic 740: Improvements to Income Tax Disclosures”. ASU 2023-09 focuses on income tax disclosures around effective tax rates and cash income taxes paid. This amendment in the ASU will become effective for public companies as of December 15, 2024 and effective to all other companies as of December 15, 2025. The Company will adopt these new standards when they become effective, which is not expected to have a material impact on its financial position and results of operations.
Note 4 — Inventories
Inventories consist of the following at:
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March 31, |
|
|
December 31, |
|
||
Finished goods |
|
$ |
|
|
$ |
|
||
Work in process |
|
|
|
|
|
|
||
Parts and subassemblies |
|
|
|
|
|
|
||
Inventories, net |
|
$ |
|
|
$ |
|
||
Note 5 — Fair Value of Financial Instruments
The Company measures the fair value of financial assets and liabilities based on the guidance of ASC 820, “Fair Value Measurement” (“ASC 820”), which defines fair value, establishes a framework for measuring fair value, and establishes disclosures about fair value measurements.
ASC 820 defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. ASC 820 also establishes a fair value hierarchy, which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. ASC 820 describes three levels of inputs that may be used to measure fair value:
The carrying amounts of the Company’s financial instruments such as cash and cash equivalents, accounts receivable and accounts payable, approximate fair value due to the short-term nature of these instruments. Cash equivalents consist of money market funds that limit their investments to only short-term U.S. Treasury Securities and repurchase agreements related to these securities. Short-term investments primarily consists of commercial paper and U.S. Treasury Bills and are carried on the condensed consolidated balance sheets at amortized cost which approximates fair value.
Cash equivalents and short-term investments measured at fair value on a recurring basis at March 31, 2025 were as follows:
|
|
In Active |
|
|
Significant |
|
|
Significant |
|
|
Total |
|
||||
Money market funds |
|
$ |
|
|
|
— |
|
|
|
— |
|
|
$ |
|
||
Short-term investments |
|
$ |
— |
|
|
$ |
|
|
$ |
— |
|
|
$ |
|
||
Cash equivalents and short-term investments measured at fair value on a recurring basis at December 31, 2024 were as follows:
10
|
|
In Active |
|
|
Significant |
|
|
Significant |
|
|
Total |
|
||||
Money market funds |
|
$ |
|
|
|
— |
|
|
|
— |
|
|
$ |
|
||
Short-term investments |
|
|
— |
|
|
$ |
|
|
|
— |
|
|
$ |
|
||
Note 6 - Accounts Payable and Other Accrued Expenses
Accounts Payable and Other Accrued Expenses consists of the following at:
|
|
March 31, |
|
|
December 31, |
|
||
Trade payables |
|
$ |
|
|
$ |
|
||
Accrued compensation and benefits |
|
|
|
|
|
|
||
Accrued professional services |
|
|
|
|
|
|
||
Warranty reserve |
|
|
|
|
|
|
||
Customer deposits |
|
|
|
|
|
|
||
Accrued insurance |
|
|
|
|
|
|
||
Other |
|
|
|
|
|
|
||
|
|
$ |
|
|
$ |
|
||
Note 7 — Common Stock and Warrants
On December 6, 2024, the Company completed a public equity offering, selling
On January 19, 2024, the Company completed a registered direct equity offering, selling
As of March 31, 2025,
During the three months ended March 31, 2025,
During the three months ended March 31, 2025 and 2024,
Note 8 — Line of Credit
On July 11, 2024 (the “Effective Date”), the Company, entered into a Loan and Security Agreement (the “Loan Agreement”) with Silicon Valley Bank.
11
The Loan Agreement provides for a revolving line of credit whereby the Company may borrow up to $
The Revolving Line terminates, and any outstanding principal amount of all advances made thereunder, and any accrued and unpaid interest thereon, become immediately due and payable on the two year anniversary of the Effective Date. The Company must also pay Bank (i) a commitment fee of $
On February 18, 2025, the Company entered into a First Amendment (the “Amendment”) to the Loan Agreement. The Amendment provides for, among other things, a new term loan facility (the “Term Loan”) to the Company of up to $
The Amendment also makes certain changes to the Company’s revolving line of credit under the Loan Agreement, including (i) increasing the defined limit for concentration of Medicare receivables that may be included as “eligible accounts” under the Loan Agreement, and (ii) increasing the permitted aggregate maximum balance that may be maintained in the Company’s German subsidiary.
The Company recorded approximately $
Approximately $
Note 9 — Stock Award Plans and Stock-Based Compensation
As of March 31, 2025, there were
Recipients of awards of restricted stock units typically sell shares in the open market to cover their individual tax liabilities and remit the proceeds to the Company, which offsets withholding taxes paid by the Company. In certain circumstances, stock awards may be net share settled upon vesting to cover the required employee statutory withholding taxes and the remaining amount is converted into shares based upon their share-value on the date the award vests. In such instances, these payments of employee withholding taxes are presented in the statements of cash flows as a financing activity. There were
12
Share-Based Compensation Expense
The Company accounts for stock awards to employees and non-employees based upon the fair value of the award on the date of grant. The fair value of that award is then ratably recognized as expense over the period during which the recipient is required to provide services in exchange for that award.
The Company attributes the value of stock-based compensation to operations on the straight-line method such that the expense associated with awards is evenly recognized over the vesting period.
The Company recognized stock-based compensation expense related to the issuance of stock option awards and restricted stock units to employees, non-employees and directors in the statements of operations as follows:
|
|
Three Months Ended |
|
|||||
|
|
March 31, |
|
|||||
|
|
2025 |
|
|
2024 |
|
||
Cost of goods sold |
|
$ |
|
|
$ |
|
||
Research and development |
|
|
|
|
|
|
||
Selling, clinical, and marketing |
|
|
|
|
|
|
||
General and administrative |
|
|
|
|
|
|
||
Total |
|
$ |
|
|
$ |
|
||
As of March 31, 2025, there was approximately $
As of March 31, 2025, there was approximately $
Note 10 — Commitments and Contingencies
Litigation
The Company may be involved from time to time in legal proceedings, claims and assessments arising from the ordinary course of business. Such matters are subject to many uncertainties, and outcomes are not predictable with assurance. There are no material claims, assessments or litigation against the Company as of March 31, 2025.
Operating Leases
As of March 31, 2025, operating lease assets were approximately $
13
|
|
|
|
|
|
|
|
March 31, 2025 |
|
|
2025 |
|
|
|
|
|
|
|
$ |
|
|
2026 |
|
|
|
|
|
|
|
|
|
|
2027 |
|
|
|
|
|
|
|
|
|
|
2028 |
|
|
|
|
|
|
|
|
|
|
Thereafter |
|
|
|
|
|
|
|
|
|
|
Total future minimum lease payments |
|
|
|
|
|
|
|
|
|
|
Less imputed interest |
|
|
|
|
|
|
|
|
|
|
Total operating lease liabilities |
|
|
|
|
|
|
|
$ |
|
|
Included in the condensed consolidated balance sheet: |
|
|
|
|
|
|
|
|
|
|
Current operating lease liabilities |
|
|
|
|
|
|
|
$ |
|
|
Non-current operating lease liabilities |
|
|
|
|
|
|
|
|
|
|
Total operating lease liabilities |
|
|
|
|
|
|
|
$ |
|
|
For the three months ended March 31, 2025 and 2024, the total lease cost is comprised of the following amounts:
|
|
|
|
For the Three Months |
|
|||||||
|
|
|
|
|
|
2025 |
|
|
2024 |
|
||
Operating lease expense |
|
|
|
|
|
$ |
|
|
$ |
|
||
Short-term lease expense |
|
|
|
|
|
|
|
|
|
|
||
Total lease expense |
|
|
|
|
|
$ |
|
|
$ |
|
||
The following summarizes additional information related to operating leases:
|
|
|
|
|
|
March 31, 2025 |
|
|
December 31, 2024 |
|
||
Weighted-average remaining lease term (in years) |
|
|
|
|
|
|
|
|
|
|
||
Weighted-average discount rate |
|
|
|
|
|
|
% |
|
|
% |
||
Supplier Finance Program Obligations
The Company finances its directors and officers insurance policy, which requires the Company to make a down payment, followed by equal payments over a defined term. During the year ended December 31, 2023, the Company entered into a policy covering the twelve-month period ending June 2024. Under this financing arrangement, the Company made nine equal monthly payments of approximately $
|
|
Three Months Ended |
|
|||||
|
|
March 31, |
|
|||||
|
|
2025 |
|
|
2024 |
|
||
Opening January 1 |
|
$ |
|
|
$ |
|
||
Payments |
|
|
|
|
|
|
||
Expensed |
|
|
|
|
|
|
||
Ending |
|
$ |
|
|
$ |
|
||
No assets are pledged as security under this arrangement.
14
Note 11 — Segment Reporting and Major Customers
Segment Reporting
ACS 280, “Segment Reporting” establishes standards for reporting information about operating segments on a basis consistent with the Company’s internal organization structure as well as information about products, business segments, and major customers in financial statements. The Company conducts its business in one operating segment, and sells products in one family, which are versions of the MyoPro. While the Company has several sales channels and operates in different geographies, the Chief Executive Officer, who is the Company's chief operating decision-maker, and is responsible for allocating resources and assessing the performance of the
For the three months ended March 31, |
|
2025 |
|
|
2024 |
|
||
Revenue |
|
|
|
|
|
|
||
Product Revenue |
|
$ |
|
|
$ |
|
||
|
|
|
|
|
|
|
||
|
|
|
|
|
|
|
||
Cost of revenue |
|
|
|
|
|
|
||
Gross profit |
|
|
|
|
|
|
||
Gross margin |
|
|
% |
|
|
% |
||
Operating expenses: |
|
|
|
|
|
|
||
Payroll and benefits expense |
|
|
|
|
|
|
||
Advertising |
|
|
|
|
|
|
||
All other segment operating expenses |
|
|
|
|
|
|
||
Payroll and benefits expense in cost of revenue |
|
|
( |
) |
|
|
( |
) |
|
|
|
|
|
|
|
||
Loss from operations |
|
$ |
( |
) |
|
$ |
( |
) |
Other expense (income) |
|
|
( |
) |
|
|
( |
) |
Income Tax Expense |
|
|
|
|
|
|
||
Net Loss |
|
$ |
( |
) |
|
$ |
( |
) |
Major Customers
For the three months ended March 31, 2025 and 2024, there were no customers which accounted for more than
At March 31, 2025, CMS and a U.S. commercial insurer and its affiliates accounted for approximately
For the three months ended March 31, 2025 and 2024, approximately
15
Note 12 — Subsequent Events
The Company evaluated subsequent events through the date the financial statements were issued, and determined that there have been no subsequent events that would require recognition in the financial statements or disclosure in the notes to the unaudited condensed consolidated financial statements.
16
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
The following discussion should be read in conjunction with our condensed consolidated financial statements and the related notes contained elsewhere in this Quarterly Report on Form 10-Q and in our other Securities and Exchange Commission filings. The following discussion may contain predictions, estimates, and other forward-looking statements that involve a number of risks and uncertainties, including those discussed under “Risk Factors”, “Cautionary Statement Regarding Forward-Looking Statements” and elsewhere in this Quarterly Report on Form 10-Q and those described under the caption “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2024. These risks could cause our actual results to differ materially from any future performance suggested below.
Overview
We are a wearable medical robotics company, specializing in myoelectric braces, or orthotics, for people with neuromuscular disorders. We develop and market the MyoPro product line, which is a myoelectric-controlled upper limb brace, or orthosis. The orthosis is a rigid brace used for the purpose of supporting a patient’s weak or deformed arm to enable and improve functional activities of daily living, (“ADLs”) in the home and community. It is custom constructed by a trained professional during a custom fabrication process for each individual user to meet their specific needs. Our products are designed to help regain function in individuals with neuromuscular conditions due to brachial plexus injury, stroke, traumatic brain injury, spinal cord injury and other neurological disorders.
We utilize digital ads on various platforms as well as television ads to reach patients who are potential candidates for our product. Once the prospective patient contacts us or is referred to us, either our trained clinical staff or a trained Orthotics and Prosthetics (“O&P”) provider will evaluate the patient for their suitability as a candidate. Initial evaluations by our trained clinical staff are often conducted using telehealth techniques, followed by an in-person clinical evaluation of the candidate. Prior to obtaining authorizations from commercial insurance companies, the patient’s medical records are collected and reviewed to make sure the device is appropriate for their condition and a prescription is always obtained from a physician. Once these documents are obtained, a pre-authorization request is submitted to the patient’s insurer. If we receive a pre-authorization, we proceed to measure the patient’s arm. If the patient is covered by Medicare Part B, no pre-authorization is required and we can move directly to taking measurements of the patient's arm. This is done either in person, or in some cases using a digital measurement kit supplied to the patient. We then use those measurements to 3D print orthotic parts, which are used to fabricate the MyoPro, and then deliver it to the patient. Since we are directly providing the device to the patient and then billing insurance ourselves, we refer to this process as direct billing. We also call on O&P practices in the United States, Europe and Australia that provide our products to their patients as well as generate indirect sales. The MyoPro product line has been approved by the Veterans Administration (“VA”) for impaired veterans, and over 100 VA facilities have ordered devices for their patients.
Our myoelectric orthoses have been clinically shown in peer reviewed published research studies to help regain the ability to complete functional tasks by supporting the affected joint and enabling individuals to self-initiate and control movement of their partially paralyzed limbs by using their own muscle signals. Our technology was originally developed at MIT in collaboration with medical experts affiliated with Harvard Medical School. Myomo was incorporated in 2004.
Other historical milestones include:
17
Recent Developments
Equity Offerings
On December 6, 2024, we completed a public offering, selling 3,450,000 shares of common stock at $5.00 per share, generating net proceeds after fees and expenses of approximately $15.8 million. Net proceeds from the offering are expected to be used to grow revenues in our direct billing channel through additional advertising spending and the addition of clinical, reimbursement and manufacturing headcount to support expected increasing demand, to increase R&D spending in order to accelerate the completion of sustaining and new product development activities, to fund systems and headcount to support growth in the O&P channel, to fund associated working capital requirements and general corporate purposes. On January 19, 2024 we completed a registered direct equity offering, selling 1,354,218 shares of common stock and 224,730 pre-funded warrants at $3.80 per share, or $3.7999 per pre-funded warrant, generating net proceeds after fees and expenses of approximately $5.4 million. Each pre-funded warrant in the above offering entitles the holder to one share of common stock upon exercise at a nominal exercise price of $0.0001 per share. See section titled “Liquidity” for further discussion.
Results of Operations
We have been growing revenues while incurring net losses and negative cash flows from operations since inception and anticipate this to continue for most of 2025. Our plan for 2025 is to invest in increasing demand and adding capacity to support our direct billing channel, while making investments to increase revenues in the U.S. O&P channel.
The following table sets forth our revenue, cost of revenue, gross profit and gross margin for each of the periods presented.
|
For the Three Months |
Period- |
||
|
2025 |
2024 |
$ |
% |
Product revenue |
$9,831,814 |
$3,754,389 |
$6,077,425 |
162% |
Cost of revenue |
3,222,184 |
1,455,345 |
1,766,839 |
121% |
Gross profit |
$6,609,630 |
$2,299,044 |
$4,310,586 |
187% |
Gross margin % |
67.2% |
61.2% |
|
6.0% |
Revenues
We derive revenue primarily from providing devices directly to patients and billing insurance companies directly. We also sell our products to O&P providers in the U.S, Europe and Australia, to the VA, and to rehabilitation hospitals. Though we increasingly provide devices directly to patients, we sometimes utilize the clinical services of O&P providers for which they are paid a fee.
Total revenue increased by approximately $6.1 million, or 162%, for the three months ended March 31, 2025, as compared to the same period in 2024. The product revenue increase was driven primarily by higher direct billing revenues due to a higher average selling price (“ASP”), as well as a higher number of revenue units as we were able to serve Medicare Part B beneficiaries in volume at the published fees starting in April 2024. Revenues generated through the direct billing channel were approximately $7.8 million, or 79% of product revenue in the three months ended March 31, 2025, compared to approximately $2.2 million, or 60%, of product revenue in the three months ended March 31, 2024.
Cost of Revenue and Gross margin
18
Cost of revenue consists of direct costs for the manufacturing, printing of orthotic parts, fabrication and fitting of our products, changes in inventory and warranty reserves and overhead costs allocated to cost of revenue.
Gross margin was 67.2% for the three months ended March 31, 2025, compared to 61.2% for the three months ended March 31, 2024. The increase in gross margin was primarily due to a higher ASP discussed above and greater absorption of fixed costs into inventory.
Operating expenses
The following table sets forth our operating expenses for each of the periods presented.
|
|
For the Three Months |
|
Period-to-Period |
||||
|
|
2025 |
|
2024 |
|
$ |
|
% |
Research and development |
|
$1,790,024 |
|
$956,215 |
|
$833,809 |
|
87% |
Selling, clinical and marketing |
|
4,395,804 |
|
2,361,845 |
|
2,033,959 |
|
86% |
General and administrative |
|
3,944,056 |
|
2,869,751 |
|
1,074,305 |
|
37% |
Total operating expenses |
|
$10,129,884 |
|
$6,187,811 |
|
$3,942,073 |
|
64% |
Research and development
Research and development (“R&D”) expenses consist of costs for our R&D personnel, including salaries, benefits, bonuses and stock-based compensation, product development costs, clinical studies, and the cost of certain third-party contractors and travel expense. R&D costs are expensed as they are incurred. We intend to accelerate our R&D efforts in 2025 and expect R&D costs to increase on an annual basis.
R&D expenses increased by approximately $0.8 million, or 87%, during the three months ended March 31, 2025, as compared to the same period in 2024. The increase was primarily due to higher costs for payroll and outside engineering services as we are accelerating our sustaining engineering and product development efforts.
Selling, clinical and marketing
Selling, clinical, and marketing (“SC&M”) expenses consist of costs for our field clinical staff, clinical training organization, and marketing personnel, including salaries, benefits, bonuses, stock-based compensation and sales commissions, costs of advertising, marketing and promotional events, corporate communications, product marketing and travel expenses. Variable compensation for personnel engaged in sales and marketing activities is generally earned and recorded as expense in the period in which the measurable work is performed. We expect SC&M expenses to increase in 2025 as we increase our advertising spending and clinical capacity to grow revenues in our direct billing channel.
SC&M expenses increased by approximately $2.0 million or 86% during the three months ended March 31, 2025, as compared to the same period in 2024. The increase was primarily due to higher payroll costs due to increased headcount in our clinical functions to support higher expected sales volume in 2025 and higher advertising expense.
General and administrative
General and administrative (“G&A”) expenses consist primarily of costs for administrative, reimbursement, and finance personnel, including salaries, benefits, bonuses and stock-based compensation, professional fees associated with legal matters, consulting expenses, costs for pursuing insurance reimbursements for our products and costs required to comply with the regulatory requirements of the SEC, as well as costs associated with accounting systems, insurance premiums and other corporate expenses. We expect that G&A expenses will increase in 2025 as a result of increasing our reimbursement capacity in order to grow revenue in the direct billing channel.
G&A increased by approximately $1.1 million or 37%, during the three months ended March 31, 2025, as compared to the same period in 2024. The increase was primarily due to increased payroll costs due to increased headcount in our reimbursement and human resource functions as part of our plan to increase our reimbursement capacity in 2025 in order to serve Medicare Part B patients, as well as higher incentive compensation accrual due to the increased head count.
Other (income), net
The following table sets forth our other income, net for each of the periods presented:
19
|
|
For the Three Months |
|
|
Period-to-Period |
|
||||||||||
|
|
2025 |
|
|
2024 |
|
|
$ |
|
|
% |
|
||||
Interest income, net |
|
$ |
(191,991 |
) |
|
$ |
(135,293 |
) |
|
$ |
(56,698 |
) |
|
|
42 |
% |
Total other income, net |
|
$ |
(191,991 |
) |
|
$ |
(135,293 |
) |
|
$ |
(56,698 |
) |
|
N/M |
|
|
Other (income) expense, net was income of approximately $192,000 for the three months ended March 31, 2025 compared to income of approximately $135,300 for the same period in 2024. The increase in other income was due primarily to higher interest income as a result of a higher average investment balance compared to the prior year period.
Income tax expense
Income tax expense recorded during the three months ended March 31, 2025 and 2024 represents the provision for income taxes for our wholly-owned subsidiary, Myomo Europe GmbH. Income tax expense increased in the three months ended March 31, 2025 as a result of higher taxable income compared to the same period in 2024.
Adjusted EBITDA
We believe that the presentation of Adjusted EBITDA, a non-GAAP financial measure, provides investors with additional information about our financial results. Adjusted EBITDA is an important supplemental measure used by our board of directors and management to evaluate our operating performance from period-to-period on a consistent basis and as a measure for planning and forecasting overall expectations and for evaluating actual results against such expectations.
We define Adjusted EBITDA as earnings before interest, taxes, depreciation and amortization adjusted for, stock-based compensation and other unusual items.
Adjusted EBITDA is not in accordance with, or an alternative to, measures prepared in accordance with U.S. GAAP. In addition, this non-GAAP measure is not based on any comprehensive set of accounting rules or principles. As a non-GAAP measure, Adjusted EBITDA has limitations in that it does not reflect all of the amounts associated with our results of operations as determined in accordance with U.S. GAAP. In particular:
Because of these limitations, you should consider Adjusted EBITDA alongside other financial performance measures including net income (loss) and our financial results presented in accordance with U.S. GAAP.
The following table provides a reconciliation of net loss to Adjusted EBITDA for each of the periods indicated:
|
|
For the Three Months |
|
|||||
|
|
2025 |
|
|
2024 |
|
||
GAAP net loss |
|
$ |
(3,465,058 |
) |
|
$ |
(3,835,632 |
) |
Adjustments to reconcile to Adjusted EBITDA: |
|
|
|
|
|
|
||
Interest income, net |
|
|
(191,991 |
) |
|
|
(135,293 |
) |
Depreciation expense |
|
|
158,442 |
|
|
|
29,685 |
|
Stock-based compensation |
|
|
540,204 |
|
|
|
320,288 |
|
Income tax expense |
|
|
136,795 |
|
|
|
82,158 |
|
Adjusted EBITDA |
|
$ |
(2,821,608 |
) |
|
$ |
(3,538,794 |
) |
20
Liquidity and Capital Resources
Liquidity
We measure our liquidity in a number of ways, including the following:
|
|
March 31, |
|
|
December 31, |
|
||
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 |
|
As of March 31, 2025, we had working capital of approximately $19.5 million and stockholders’ equity of approximately $21.7 million. We used approximately $2.7 million in cash for operating activities during the three months ended March 31, 2025.
We have historically funded our operations through financing activities, including raising equity and debt capital. In December 2024, we completed a public equity offering, pursuant to which we sold 3,450,000 shares of common stock at $5.00 per share, generating net proceeds after fees and expenses of approximately $15.8 million. In January 2024, we completed a registered direct equity offering, pursuant to which we sold 1,354,218 shares of common stock and 224,730 pre-funded warrants at $3.80 per share, or $3.7999 per pre-funded warrant, generating net proceeds after fees and expenses of approximately2 $5.4 million. In July 2024, we entered into a Loan and Security Agreement with Silicon Valley Bank, a division of First-Citizens Bank & Trust Company, which provides us the ability to borrow up to $4.0 million against eligible accounts receivable. The line of credit remains undrawn as of the issuance date of these financial statements. Availability under the line of credit is approximately $216,600 based on eligible accounts receivable as of March 31, 2025. We amended the Loan and Security Agreement in February 2025 to provide for, among other changes, a $3.0 million term loan facility, which is available to be drawn at any time until February 28, 2026. Considering our cash balance and availability under our debt arrangements as of March 31, 2025 and our operating plans discussed below, we believe there will be sufficient cash to fund our operations and capital expenditures for the next 12 months from the date of this report.
Our operating plans are primarily focused on growing revenues in our direct billing channel in 2025, while we work concurrently on growing revenues in the O&P channel. This involves increasing our advertising spending and adding headcount to increase our clinical, reimbursement and manufacturing capacity in order to serve a higher volume of patients in 2025. These investments are expected to result in negative cash flows for at least the first three quarters of 2025.
Our business is dependent upon reimbursement of our products by insurance companies and government-controlled health care plans such as Medicare and Medicaid in the United States and by statutory health insurance plans in Germany, which could prevent our revenues from growing to the level necessary to return to cash flow breakeven and remain that way on a sustaining basis. We believe that we have access to capital resources, if necessary, through potential public or private equity offerings, debt financings, or other means. If we are unable to obtain adequate funds on reasonable terms, we may be required to significantly curtail or discontinue operations or obtain funds by entering into financing agreements on unattractive terms. We may also explore strategic alternatives for the purpose of maximizing stockholder value. There can be no assurance we will be successful in implementing our plans to sustain our operations and continue to conduct our business.
Cash Flows
|
|
Three Months Ended March 31, |
|
|||||
|
|
2025 |
|
|
2024 |
|
||
Net cash used in operating activities |
|
$ |
(2,676,899 |
) |
|
$ |
(3,245,564 |
) |
Net cash used in investing activities |
|
|
(1,896,098 |
) |
|
|
(3,542,565 |
) |
Net cash (used in) provided by financing activities |
|
|
(36,506 |
) |
|
|
5,361,909 |
|
Effect of foreign change rate changes on cash |
|
|
30,929 |
|
|
|
(10,360 |
) |
Net increase (decrease) in cash, cash equivalents and restricted |
|
$ |
(4,578,574 |
) |
|
$ |
(1,436,580 |
) |
Operating Activities. The net cash used in operating activities for the three months ended March 31, 2025 was primarily used to fund a net loss of approximately $3.5 million, adjusted for non-cash expenses in the aggregate amount of approximately $1.0 million and by approximately $0.2 million of cash used by net changes in the levels of operating assets and liabilities, primarily related to increases in accounts receivable, inventory and prepaid expenses and other current assets, offset by an increase in accounts payable and accrued expenses.
The net cash used in operating activities for the three months ended March 31, 2024 was primarily used to fund a net loss of approximately $3.8 million, adjusted for non-cash expenses in the aggregate amount of approximately $0.4 million, offset by approximately $0.2 million of
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cash generated by net changes in the levels of operating assets and liabilities, primarily related to a decrease in accounts receivable and an increase in accounts payable and accrued expenses, offset by an increase in inventory.
Investing Activities. During the three months ended March 31, 2025 and 2024, our cash used in investing activities of approximately $1.9 million and $3.5 million, respectively, was primarily related to our purchase of short-term investments and purchases of equipment.
Financing Activities. There was less than $0.1 million in cash used by financing activities and $5.4 million in cash generated from financing activities during the three months ended March 31, 2025 and 2024, respectively, 2024. Cash used during the three months ended March 31, 2025 was due to payment of issuance costs associated with the amendment to our line of credit agreement with Silicon Valley Bank. Cash generated by financing activities in the three months ended March 31, 2024 was due entirely to the net proceeds from our equity offering in January 2024.
Critical Accounting Estimates
Our discussion and analysis of our financial condition and results of operations is based upon our consolidated financial statements, which have been prepared in accordance with U.S. GAAP. The preparation of these consolidated financial statements requires us to make estimates, judgments and assumptions that affect the reported amounts of assets, liabilities, revenue and expenses. We base our estimates on historical experience and on various other assumptions that we believe are reasonable under the circumstances. These estimates and assumptions are reviewed on an on-going basis and updated as appropriate. Materially different results can occur if circumstances change and additional information becomes known. Actual results may differ from these estimates. Refer to Note 3 - Summary of Significant Accounting Policies. Our most critical accounting estimate is the timing and amount of revenue recognition based on assertions and estimates of payments from certain insurance payers.
Timing and Amount of Revenue Recognition
The timing and amount of revenue recognized is determined based on certain estimates. For revenue derived from patients with Medicare Part B, we determined we had sufficient payment history in order to recognize revenue upon delivery of the device to the patient based on the published fees by CMS. With respect to patients with Medicare Advantage or other commercial insurance, except for a small number of payers, we do not have contracts to establish pricing or provide evidence of an arrangement. As a result, we rely on a history of payments after receiving an insurance authorization, delivery of the device and submission of a claim as evidence of an arrangement. Payment history is also used to estimate how much we expect to be paid upon delivery of our device and submission of an insurance claim, which determines how much revenue we recognize. For other Medicare Advantage and other commercial insurance payers, we have determined that we do not have sufficient collection history with the payer to assert evidence of an arrangement and collectibility. For these payers, revenue is recognized at payment, which is when we can determine how much we will be paid for the device.
Recent Accounting Standards
Information regarding new accounting standards is included in Note 3 — Recently Adopted Accounting Standards to our unaudited condensed consolidated financial statements contained in Item 1 of this Quarterly Report on Form 10-Q.
Item 3. Quantitative and Qualitative Disclosures about Market Risk
This item is not applicable to us as a smaller reporting company.
Item 4. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
The term “disclosure controls and procedures,” as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), refers to controls and procedures that are designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that such information is accumulated and communicated to a company’s management, including its principal executive and principal financial officers, as appropriate to allow timely decisions regarding required disclosure. Our management, with the participation of our Chief Executive Officer, our principal executive officer, and our Chief Financial Officer, our principal financial officer, has evaluated the effectiveness of our disclosure controls and procedures as of March 31, 2025, the end of the period covered by this Quarterly Report on Form 10-Q.
Management recognizes that any disclosure controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives, and management necessarily applies its judgment in evaluating the cost-benefit relationship of possible
22
controls and procedures. Based on the evaluation of our disclosure controls and procedures as of December 31, 2024, our Chief Executive Officer and our Chief Financial Officer have concluded that our disclosure controls and procedures were not effective as of such date at the reasonable assurance level due to the material weakness in the design of effective information technology general controls over our enterprise reporting system described below.
Material Weakness
A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the company’s annual or interim financial statements will not be prevented or detected on a timely basis.
We identified a material weakness as of December 31, 2024 related to a lack of design and maintenance of effective information technology general controls due to privileged access rights for two individuals, lack of formal processes for user provisioning, periodic user access review and change management for financial reporting system and lack of formal reviews of key third party service provider SOC reports. The deficiencies could allow for inappropriate financial transactions to be recorded that would not be detected by our other manual controls, rendering them ineffective. This material weakness has not resulted in any identified misstatements to our financial statements.
Notwithstanding the material weaknesses in our internal control over financial reporting, our management has concluded that our condensed consolidated financial statements and related notes thereto included in this Quarterly Report on Form 10-Q fairly present in all material respects the financial condition, results of operations and cash flows of the Company and have been prepared in accordance with generally accepted accounting principles. Our Chief Executive Officer and Chief Financial Officer have certified that, based on each such officer’s knowledge, the financial statements, as well as the other financial information included in this Quarterly Report on Form 10-Q, fairly present in all material respects the financial condition, results of operations and cash flows of the Company as of, and for, the periods presented in this Quarterly Report on Form 10-Q.
Management’s Plan for Remediation of the Material Weakness
Management, with the oversight of the Audit Committee of the Board of Directors, is committed to maintaining a strong internal control environment. In response to the material weakness identified above, we intend to remediate the material weakness in internal control over financial reporting by formalizing our process and review of user provisioning to enable only the appropriate personnel to have access, including giving rights to provision access to our financial reporting system to an individual outside our finance organization, and formalizing change management processes and review of key third party service provider SOC reports.
As of March 31, 2025, we have implemented changes in the provisioning of access rights and procedures to improve our change management processes. Other enhancements to our information technology general controls are expected to be implemented in the second quarter of 2025.
We believe that these actions, when fully implemented, will remediate the material weakness. However, the material weakness will not be considered fully remediated until the design of these controls are determined to operate for a sufficient period of time and management has concluded, through testing, that these controls are effective. As we continue to evaluate operating effectiveness and monitor improvements to our internal control over financial reporting, we may take additional measures to address control deficiencies or modify the remediation plan described above.
Management’s Report on Internal Control over Financial Reporting
Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Exchange Act Rule 13a-15(f). Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.
Our management assessed the effectiveness of our internal control over financial reporting as of March 31, 2025. In making this assessment, we used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control - Integrated Framework (2013). Based on our assessment, and as a result of the material weakness described above, we believe that as of March 31, 2025, our internal control over financial reporting was not effective at the reasonable assurance level. However, after giving full consideration to this material weakness, our management has concluded that our condensed consolidated financial statements present fairly, in all material respects, our financial position, results of operations and cash flows for the periods disclosed in conformity with generally accepted accounting principles.
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Changes in Internal Control over Financial Reporting
There were no changes in our internal control over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act) identified in connection with the evaluation of our internal control that occurred during the quarter ended March 31, 2025 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
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Part II. OTHER INFORMATION
Item 1. Legal Proceedings
The Company may be involved in legal proceedings, claims and assessments arising from the ordinary course of business. Such matters are subject to many uncertainties, and outcomes are not predictable with assurance. There is no material litigation against the Company at this time that is required to be disclosed under Item 103 of Regulation S-K.
Item 1A. Risk Factors
Except as set forth below, there have been no material changes to our risk factors from those disclosed in Part I, Item 1A. "Risk Factors" in our Annual Report on Form 10-K for the year ended December 31, 2024.
Risks Related to Our Operating and Financial Results
If CMS amends, restricts, or retracts coverage requirements, its billing contractors and insurers offering Medicare Advantage insurance plans may restrict what they reimburse for the MyoPro, which would have an adverse effect on our business.
Revenues from patients who are covered by Medicare Advantage insurance plans have historically been a significant portion of our overall revenues. However, Medicare Advantage plans have been reducing the number of authorizations for the MyoPro since the second half of 2024, which is negatively impacting our revenues. Approximately 17% and 38% of our product revenues were derived from patients with Medicare Advantage insurance plans for the three months ended March 31, 2025 and 2024, respectively. Since CMS published reimbursement amounts for the MyoPro in April 2024, revenues from Medicare Part B patients represented 59% of total revenue for the three months ended March 31, 2025. If CMS amends, restricts, or retracts its November 2023 rule classifying MyoPro as a brace, amends or retracts any published fees, or establishes more restrictive inclusion criteria for coverage, our Medicare revenues could be negatively impacted and insurers offering Medicare Advantage insurance plans may no longer cover or adequately reimburse for the MyoPro. Further, continued utilization management efforts by Medicare Advantage plans could result in further decreases in authorizations. As a result of these factors, our overall revenues and cash flows would be negatively impacted, which could have an adverse effect on our business. See “Risks Related to our Reliance on Third Parties—We may not be able to obtain third-party payer reimbursement, including reimbursement by Medicare, for our products” for additional information.
Changes made by direct to consumer advertising companies in how they reach prospective patients could adversely impact our lead generation efforts, resulting in higher advertising cost per addition to our patient pipeline and have an adverse effect on revenues.
We rely on a variety of direct-to-consumer advertising companies to help us reach and educate prospective patients, their caregivers and families regarding the potential benefits of the MyoPro. These companies are subject to various privacy laws and regulations regarding the use of protected patient health and other identifying information in advertising activities. Changes in the algorithms and other methods used by these companies to remain in compliance with these laws and regulations, which we do not control, nor have input into, may adversely affect our lead generation, our advertising cost per addition to our patient pipeline, which we refer to as cost per pipeline add, and our revenues. For instance, in the first quarter of 2025, a social media advertising company we utilize made a change to the algorithm they use to target prospective patients. This change resulted in decreased lead generation for the first half of the first quarter and a higher cost per pipeline add in the first quarter, which is also expected to negatively impact our revenue growth in the second quarter of 2025. Methods and algorithms used by media companies are continually evolving and we cannot provide any assurance that future changes will not impact our revenues and results of operations.
Significant political, trade, and regulatory developments, and other circumstances beyond our control, could have a material adverse effect on our financial condition or results of operations.
We sell our products in countries throughout the world. Significant political, trade, or regulatory developments in the jurisdictions in which we sell our products, such as those stemming from the change in U.S. federal administration, are difficult to predict and may have a material adverse effect on us. These developments may include tariffs or changes in reimbursement policies for Medicaid and Medicare. For example, in April 2025, the United States imposed broad tariffs on imports from virtually all countries, with particularly high tariffs on imports from China. Since this announcement, most tariffs for countries other than China have been suspended temporarily. In response to tariffs, some countries have implemented retaliatory tariffs on U.S. goods, while others seek to negotiate agreements regarding U.S. imposed tariffs. Historically, tariffs have led to increased trade and political tensions and, to date, the outcome of the negotiations between the United States and the various countries is not yet clear. While we estimate that tariffs on imports, if fully implemented as announced in April 2025, are expected to have less than a 100 basis point (1%) impact on gross margin in 2025, we cannot provide any assurance that changes in political,
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trade, regulatory, or economic conditions, including U.S. trade policies, will not have a material adverse effect on our financial condition or results of operations.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds from Registered Securities
None.
Item 5. Other Information
(c)
The following table discloses any officer (as defined in Rule 16(a)-1(f) under the Securities Exchange Act of 1934, as amended) or director who adopted a Rule 10b5-1 trading arrangement or non-Rule 10b5-1 trading arrangement (as such terms are defined in Item 408 of Regulation S-K) during the three months ended March 31, 2025:
Name and Title |
Type of Trading Arrangement |
Action Taken (Date of Action) |
Duration or End Date |
Aggregate Number of Securities to be Sold |
Description of Trading Arrangement |
Trading Plan Intended to satisfy the affirmative defense conditions of Securities Exchange Act Rule 10b5-1(c) |
( |
Sales of shares of our common stock pursuant to the terms of the trading plan |
Other than as disclosed above, no other officer or director
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Item 6. Exhibits
The exhibits filed as part of this Quarterly Report on Form 10-Q are set forth on the Exhibits Index, which is incorporated by reference.
Exhibits Index
Exhibit No. |
|
Exhibit Description |
3.1 |
|
|
|
|
|
3.2 |
|
|
|
|
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3.3 |
|
|
|
|
|
3.4 |
|
|
|
|
|
10.1 |
|
|
|
|
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31.1* |
|
|
|
|
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31.2* |
|
|
|
|
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32.1+ |
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|
|
|
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32.2+ |
|
|
|
|
|
101.INS* |
|
Inline XBRL Instance Document - the instance document does not appear in the Interactive Data File because XBRL tags are embedded within the Inline XBRL document. |
101.SCH* |
|
Inline XBRL Taxonomy Extension Schema Document with embedded linkbase documents. |
104* |
|
Cover Page Interactive Data File (embedded within the Inline XBRL document) |
* Filed herewith.
+ The certifications furnished in Exhibits 32.1 and 32.2 hereto are deemed to accompany this Quarterly Report on Form 10-Q and will not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, except to the extent that the Registrant specifically incorporates it by reference. Such certification will not be deemed to be incorporated by reference into any filings under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, except to the extent that the Registrant specifically incorporates it by reference.
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SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
Date May 7, 2025
|
Myomo, Inc. |
|
|
|
/s/ David A. Henry |
|
David A. Henry |
|
Chief Financial Officer (Principal Financial and Accounting Officer) |
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