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Myomo Announces Second Quarter 2018 Financial Results

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Achieved Revenue Growth of 106%

Myomo, Inc. (NYSE:MYO) ("Myomo" or the "Company"), a wearable
medical robotics company that offers increased functionality for those
suffering from neurological disorders and upper limb paralysis, today
reports its financial results for the second quarter ended June 30, 2018.

Recent Highlights and Accomplishments:

  • Achieved total revenue in the second quarter 2018 of $632,000, an
    increase of 106%, versus the comparable period of 2017.
  • Announced agreements with leading orthotics and prosthetics (O&P)
    practices to bring MyoPro® availability to 16 new U.S. locations.
    Myomo currently has 80 U.S. locations offering the MyoPro line of
    powered orthosis.
  • Announced the introduction of MyoPro myoelectric arm orthosis (powered
    brace) for adolescent patients with paralyzed or weakened arms.
  • Received a favorable preliminary decision from the Centers for
    Medicare & Medicaid Services ("CMS") regarding the Company's
    application for Healthcare Common Procedure Coding System (HCPCS) "L".
  • Appointed Micah Mitchell as Chief Commercial Officer.

Paul R. Gudonis, Chairman & CEO of Myomo, stated: "We are pleased to
report quarterly revenues growth of 106% year over year. We have opened
new sales regions, added new O&P locations, and launched digital
marketing campaigns to reach the many individuals in the US with upper
limb paralysis. With growing interest from patients and O&P providers,
we continue to expect increased revenue for the year."

Financial Results

         
Three months ended Period-to-period Six months ended Period-to-period
June 30, change June 30, change
2018   2017 $     % 2018   2017 $     %
 
Revenue $ 632,369 $ 306,683 $ 325,686 106 % $ 945,548 $ 522,914 $ 422,634 81 %
 
Cost of revenue 200,446   98,641   101,805 103 %   308,526   177,210   131,316 74 %
 
Gross margin $ 431,923 $ 208,042 $ 223,881 108 % $ 637,022 $ 345,704 $ 291,318 84 %
Gross margin% 68 %   68 % - %   67 %   66 % 1 %
 

Total revenue in the second quarter 2018 was $632,000, an increase of
106%, versus the comparable period of 2017. Total revenue for the six
months ended June 30, 2018 was $946,000, an increase of 81%, versus the
comparable period of 2017. Our results for the three and six months
ended June 30, 2018, included increases in units, as well as a higher
average selling price primarily due direct sales.

Gross margin was 68% for the quarter ended June 30, 2018 and 2017. Gross
margin was 67% and 66% for the six months ended June 30, 2018 and 2017,
respectively.

Operating expenses were $3,114,000, an increase of $973,000, or 45%,
during the three months ended June 30, 2018, versus the comparable
period of 2017. Operating expenses were $5,722,000, an increase of
$2,079,000, or 57%, during the six months ended June 30, 2018, as
compared to the six months ended June 30, 2017. The increases in our
operating expenses primarily reflect higher compensation costs
associated with the addition of personnel, the expansion of our sales,
marketing and product development efforts, and increased spending to
secure reimbursement, as well as increased administrative costs to
support our growing business and public company compliance requirements.

During the three months ended June 30, 2018 the company generated
interest income of $50,000, as compared to incurring interest expense of
$146,250 in the same period of 2017. We did not incur interest expense
during the three months ended June 30, 2018 due to the payoff of our
outstanding debt and our convertible promissory notes being converted
into common stock upon the closing of our IPO on June 9, 2017.

The Company's net loss for the quarter ended June 30, 2018 amounted to
$2,630,000, compared with a net loss of $7,382,000 for the corresponding
period of 2017. Net loss for the quarter ended June 30, 2017 includes a
$5,172,000 charge for debt discount on convertible notes. Net loss
available to common stockholders for the quarter ended June 30, 2018 was
$2,630,000 or ($0.21) per share, compared with a net loss available to
common stockholders of $7,755,000, or ($3.35) per share, for the
corresponding year ago period.

Adjusted EBITDA1 for the quarter ended June 30, 2018 was a
loss of $2,512,000, compared with a loss of $1,656,000 for the
corresponding 2017 period. Adjusted EBITDA for the six months ended June
30, 2018 was a loss of $4,564,000, compared with a loss of $2,997,000
for the corresponding 2017 period. A reconciliation of GAAP net loss to
this non-GAAP financial measure has been provided in the financial
statement tables included in this press release. An explanation of this
measure is also included below under the heading "Non-GAAP Financial
Measures."

Liquidity

Cash on hand at June 30, 2018 was $11,684,000, compared to $12,959,000
at December 31, 2017.

Conference Call and Webcast Information
Myomo will hold a
conference call today, August 7, 2018 at 4:30 p.m. EDT. To access the
conference call, please dial 1-877-270-2148 from the U.S. or
1-412-902-6510 internationally. Please instruct the operator to join you
into Myomo's earnings conference call. A webcast and accompanying slides
can also be accessed through Myomo's Investor
Relations
page. Please allow extra time prior to the call to visit
the site and download any necessary software to listen to the live
broadcast.

A replay of the conference call will be available approximately one hour
after completion of the live conference call at the Investor
Relations
page. A dial-in replay of the call will be available
until August 21, 2018; please dial 1-877-344-7529 from the U.S. or
1-412-317-0088 internationally and provide the passcode of 10122822.

(Tables follow)

About Myomo
Myomo, Inc. is a wearable medical robotics
company that offers expanded mobility for those suffering from
neurological disorders and upper limb paralysis. Myomo develops and
markets the MyoPro product line. MyoPro is a powered upper limb orthosis
designed to support the arm and restore function to the weakened or
paralyzed arms of patients suffering from CVA stroke, brachial plexus
injury, traumatic brain or spinal cord injury, ALS or other
neuromuscular disease or injury. It is currently the only marketed
device that, sensing a patient's own EMG signals through non-invasive
sensors on the arm, can restore an individual's ability to perform
activities of daily living, including feeding themselves, carrying
objects and doing household tasks. Many are able to return to work, live
independently and reduce their cost of care. Myomo is headquartered in
Cambridge, Massachusetts, with sales and clinical professionals across
the U.S. For more information, please visit www.myomo.com.

1 Adjusted EBITDA is earnings before interest, taxes,
depreciation and amortization adjusted for the impact of the write-off
of unamortized debt discount associated with conversion of convertible
notes into common stock and warrants, stock based-compensation, the
impact of the fair value revaluation of our derivative liabilities and
the loss on early extinguishment of debt.

Forward Looking Statements
This press release contains
forward-looking statements regarding the Company's future business
expectations, including the scale-up and expansion of commercial
operations, projected users of MyoPro, our expectations for revenues and
our results of operations, and the potential benefits to users of our
products, which are subject to the safe harbor provisions of the Private
Securities Litigation Reform Act of 1995. These forward-looking
statements are only predictions and may differ materially from actual
results due to a variety of factors.

These factors include, among other things:

  • our sales and commercialization efforts;
  • our ability to achieve reimbursement from third-party payers for our
    products;
  • our dependence upon external sources for the financing of our
    operations;
  • our ability to effectively execute our business plan; and
  • our expectations as to our clinical research program and clinical
    results.

More information about these and other factors that potentially could
affect our financial results is included in Myomo's filings with the
Securities and Exchange Commission, including those contained in the
risk factors section of the Company's annual report on Form 10-K,
subsequent quarterly reports on Form 10-Q and other filings with the
Commission. The Company cautions readers not to place undue reliance on
any such forward-looking statements, which speak only as of the date
made. Although the forward-looking statements in this release of
financial information 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. The Company disclaims any obligation subsequently to revise any
forward-looking statements to reflect events or circumstances after the
date of such statements or to reflect the occurrence of anticipated or
unanticipated events.

Non-GAAP Financial Measures
Myomo has provided in this
release of financial information that has not been prepared in
accordance with generally accepted accounting principles in the United
States, or GAAP. This information includes Adjusted EBITDA. This
non-GAAP financial measure is not in accordance with, or an alternative
for, GAAP and may be different from similar non-GAAP financial measures
used by other companies. Myomo believes that the use of this non-GAAP
financial measures provides supplementary information for investors to
use in evaluating operating performance and in comparing its financial
measures with other companies in Myomo's industry, many of which present
similar non-GAAP financial measures. Adjusted EBITDA is EBITDA adjusted
for the impact of the write off of unamortized debt discount associated
with conversion of convertible notes into common stock and warrants,
stock based-compensation, the impact of the fair value revaluation of
our derivative liabilities and the loss on early extinguishment of debt.
Non-GAAP financial measures that Myomo uses may differ from measures
that other companies may use. This non-GAAP financial measure disclosed
by Myomo is not meant to be considered superior to or a substitute for
results of operations prepared in accordance with GAAP, and should be
viewed in conjunction with, GAAP financial measures. Investors are
encouraged to review the reconciliation of this non-GAAP measure to its
most directly comparable GAAP financial measure. A reconciliation of
GAAP to the non-GAAP financial measures has been provided in the tables
included as part of this press release.

 

     

MYOMO, INC.
CONDENSED STATEMENTS OF OPERATIONS
(unaudited)

         
Three months ended

 

Six months ended

June 30,

 

June 30,

2018     2017 2018     2017
Revenue $ 632,369 $ 306,683 945,548 $ 522,914
 
Cost of revenue   200,446   98,641 308,526   177,210
 
Gross margin   431,923   208,042 637,022   345,704
 
Operating expenses:
Research and development 486,982 708,622 859,341 1,065,507
Selling, general and administrative   2,627,005   1,432,862 4,862,642   2,577,328
 
Total operating expenses   3,113,987   2,141,484 5,721,983   3,642,835
 
Loss from operations (2,682,064) (1,933,442) (5,084,961) (3,297,131)
 
Other expense (income)
Change in fair value of derivative liabilities (2,661) 130,162 (17,968) 155,008
Debt discount on convertible notes 5,172,000 5,172,000
Interest and other expense, net   (49,842)   146,250 (92,030)   314,115
Total other expense (income)   (52,503)   5,448,412 (109,998)   5,641,123
 
 
Net loss (2,629,561) (7,381,854) (4,974,963) (8,938,254)
Deemed discount – accreted preferred stock discount (246,827) (274,011)
Cumulative dividend to Series B-1 preferred stockholders   (125,903)   (287,779)
Net loss available to common stockholders $ (2,629,561) $ (7,754,584) (4,974,963) $ (9,500,044)
 
Weighted average number of common shares outstanding:
Basic and diluted   12,407,526   2,312,649 12,155,600   1,722,168
 
Net loss per share available to common stockholders:
Basic and diluted $ (0.21) $ (3.35) (0.41) $ (5.52)
       
MYOMO, INC.
CONDENSED BALANCE SHEETS
 
June 30, 2018 December 31, 2017
ASSETS (Unaudited)
Current Assets:
Cash and cash equivalents $ 11,683,729 $ 12,959,373
Accounts receivable 384,951 297,039
Inventories, net 247,624 201,155
Prepaid expenses and other 462,782     388,275  
Total Current Assets 12,779,086 13,845,842
Restricted cash 75,000 52,000
Deferred offering costs 49,042
Equipment, net 163,849     77,150  
Total Assets $ 13,066,977   $ 13,974,992  
 
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIENCY)
Current liabilities:
Accounts payable and other accrued expenses $ 1,399,335 $ 1,277,236
Derivative liabilities 21,962 39,930
Deferred revenue 149,086   168,006  
Total Current Liabilities 1,570,383 1,485,172
Deferred revenue, net of current portion 45,496   44,042  
Total Liabilities 1,615,879     1,529,214  
 
Commitments and Contingencies
 
Stockholders' Equity (Deficiency)
Common stock 1,241 1,114
Undesignated preferred stock
Additional paid-in capital 51,404,071 47,423,915
Accumulated deficit (39,947,750 ) (34,972,787 )
Treasury stock (6,464 )   (6,464 )
Total Stockholders' Equity (Deficiency) 11,451,098     12,445,778  
Total Liabilities and Stockholders' Equity (Deficiency) $ 13,066,977   $ 13,974,992  
       

MYOMO, INC.
CONDENSED STATEMENTS OF CASH FLOWS
(unaudited)

 
For the six months ended June 30, 2018 2017
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $ (4,974,963 ) $ (8,938,254 )
Adjustments to reconcile net loss to net cash used in operations:
Depreciation 28,900 4,546
Stock-based compensation 492,080 295,418
Amortization of debt discount 17,765
Debt discount on convertible notes 5,172,000
Excess and obsolete inventory reserve 28,887 36,028
Common stock issued for services 30,000
Change in fair value of derivative liabilities (17,968 ) 155,008
Changes in operating assets and liabilities:
Accounts receivable (87,912 ) (139,525 )
Inventories (109,498 ) (76,621 )
Prepaid expenses and other (74,507 ) (121,633 )
Accounts payable and other accrued expenses 122,099 594,339
Accrued interest 209,627
Deferred revenue (17,466 ) 14,297  
Net cash used in operating activities (4,610,348 ) (2,747,005 )
CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of equipment (81,457 ) (4,987 )
Net cash used in investing activities (81,457 ) (4,987 )
CASH FLOWS FROM FINANCING ACTIVITIES
Payments of issuance costs (49,042 )
Net settlement of vested restricted stock units to fund related
employee
statutory tax withholding
(68,190 )
Proceeds from exercise of stock options 2 2,982
Proceeds from exercise of warrants 3,556,391
Proceeds from IPO, net of offering costs (1) 4,423,315
Proceeds from private placement, net of offering costs 2,922,885
Proceeds from convertible promissory notes, net 1,770,000
Repayment of note payable, MLSC   (54,123 )
Net cash provided by financing activities 3,439,161   9,065,059  
 
Net (decrease) increase in cash, cash equivalents and restricted cash (1,252,644 ) 6,313,067
 
Cash, cash equivalents and restricted cash, beginning of period 13,011,373   849,174  
   
Cash, cash equivalents and restricted cash, end of period $ 11,758,729   $ 7,162,241  
 
SUPPLEMENTAL DISCLOSURE CASH FLOW INFORMATION
Cash paid during the period for interest $ $ 59,536
 
SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING
AND FINANCING
ACTIVITIES
Inventory capitalized as sales demo equipment $ 34,142 $
Exchange of 2015 convertible promissory notes for 2016
convertible
promissory notes
$ $ 430,000
Accretion of convertible preferred stock to redemption value $ $ 274,011
Conversion of accrued interest to principal $ $ 21,916
Conversion of convertible preferred stock into common stock $ $ 12,946,252
Conversion of convertible promissory notes and accrued interest
into
common stock
$ $ 5,467,389
Issuance of selling agent warrants in connection with IPO $ $ 156,725
Deferred offering costs to additional paid-in capital upon IPO
closing (1)
$ $ 438,237
IPO issuance costs included in accounts payable and accrued expense $ $ 31,930
 
 

 

(1) IPO gross proceeds of $4,991,236 are reduced by $567,921 of IPO
offering costs that were incurred in 2017. Another $438,237 of IPO
deferred offering costs were paid for in 2016.

 

   

MYOMO, INC.
RECONCILIATION OF GAAP NET LOSS TO
ADJUSTED EBITDA

   

(unaudited)

       
 
Three months ended Six months ended
June 30, June 30,
2018 2017 2018 2017
GAAP net loss $ (2,629,561) $ (7,381,854) $ (4,974,963) $ (8,938,254)
Adjustments to reconcile to Adjusted EBITDA:
 
Interest (income) expense (49,842) 146,057 (92,030) 286,928
Other expense 193 27,187
Depreciation expense 14,301 2,377 28,900 4,546
Stock-based compensation 155,724 275,279 492,080 295,418
Change in fair value of derivative liabilities (2,661) 130,162 (17,968) 155,008
Debt discount on convertible notes     5,172,000     5,172,000
Adjusted EBITDA $ (2,512,039) $ (1,655,786) $ (4,563,981) $ (2,997,167)

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