Myomo outlines revised 2025 revenue growth target of 23%-29% as lead quality and pipeline conversion shift

Earnings Call Insights: Myomo, Inc. (MYO) Q2 2025

MANAGEMENT VIEW

* CEO Paul R. Gudonis stated that "our second quarter revenues were slightly ahead of our expectations, while several operating metrics were below our plans, and those metrics and trends will impact our near-term performance." He addressed shareholder concerns regarding stock price performance and reaffirmed commitment to "market leadership with our proven MyoPro product line, adjusting our plans to grow the business and managing our financials to sustainable cash flow positive operations."
* Gudonis reported adjustments in marketing and operations, including engaging a new digital ad agency and shifting advertising dollars from social media to television. "We hit a record level of leads in June with 4x as many leads generated as in January earlier this year."
* Gudonis described recent cost reductions, including a July headcount reduction of about 8% of the U.S. workforce and other spending cuts, which "are expected to save us at least $2 million in operating expenses and capital expenditures over the next 12 months."
* Gudonis outlined expansion in the clinical referral program and O&P channel, noting "the number of O&P orders doubled from Q1 to Q2 of this year, and we're expecting continued order growth from this channel going forward."
* Gudonis highlighted challenges with Medicare Advantage denials and appeals, and expanded contracting covering "35 million lives with signed or pending agreements."
* CFO David A. Henry said, "Revenue for the second quarter of 2025 was $9.7 million. This represents a 28% increase versus the prior year and was driven by a higher number of revenue units and a higher average selling price or ASP."
* Henry reported that "operating loss for the second quarter of 2025 was $4.6 million compared with an operating loss of $1.1 million in the prior year quarter. Net loss for the second quarter of 2025 was $4.6 million or $0.11 per share."

OUTLOOK

* Henry provided guidance: "we expect third quarter revenue to be between $9.5 million and $10 million, up 3% to 9% year-over-year. For the full year, we now expect revenue to be in the range of $40 million to $42 million, up 23% to 29% versus 2024. This revised guidance assumes recent history continues regarding Medicare Advantage authorization and pipeline conversion rates and moderate improvement in Medicare Part B patient flow."
* Gudonis stated, "While we expect 2025 to be another year of revenue growth... we are updating our expectations for revenue growth to 23% to 29% in 2025."

FINANCIAL RESULTS

* Henry reported "Revenue for the second quarter of 2025 was $9.7 million."
* Delivered 178 MyoPro revenue units during the quarter, with 95 of those units from authorizations and orders received in the second quarter.
* ASP increased 14% versus the prior year to approximately $54,200.
* Gross margin for Q2 2025 was 62.7%, down from 70.8% for the prior year quarter, primarily due to "higher material costs, demo unit builds and overhead spending, including payroll and higher lease expense for the new facility."
* Operating expenses for Q2 2025 were $10.6 million, up 65% over the second quarter of 2024, driven by "higher advertising spending to compensate for lower conversion of leads to pipeline adds and by higher headcount throughout the organization."
* Cash, cash equivalents, and short-term investments as of June 30, 2025, were $15.5 million.

Q&A

* Chase Richard Knickerbocker, Craig-Hallum, asked about Q3 guidance and fill units. Henry replied, "We are seeing more fill units that are being a higher percentage of our backlog."
* Knickerbocker asked about O&P lead acceleration. Gudonis answered, "We've got about 100 CPOs in that process... I'm expecting we're going to continue to see growth in that channel."
* Knickerbocker inquired about advertising spend trends. Henry stated, "I would assume that advertising dollars are roughly flat in third quarter with second. And then in fourth quarter, they generally go down."
* Scott Robert Henry, AGP, asked about O&P channel clinician numbers. Gudonis clarified, "About 300 have gone through the evaluation training. And then there -- it's up to them to then actively go out and seek their own pipeline... we are focusing on are the really active ones and it is about 100 of them right now."
* Scott Robert Henry asked about pipeline adds and quality. Henry responded, "We're not giving specific guidance on pipeline adds for third quarter, but the things that we are doing is meant to grow the number of pipeline adds over time."
* Scott Robert Henry questioned authorization and attrition rates. Henry explained, "I think that rate is going to probably continue. Hopefully, it stabilizes here, but I think it's going to -- I don't know if it returns to the 17% until Medicare Advantage plans start authorizing more."
* Sean Lee, H.C. Wainwright, asked about reimbursement denials from payers. Gudonis replied, "these Medicare Advantage plans are trying to deny to delay approvals... we're winning more" appeals. For commercial plans, "we are getting authorizations with commercial plans such as some of the Blue Cross Blue Shield plans."
* Jeremy Pearlman, Maxim Group, asked about social media lead quality. Gudonis said, "we just found that the leads we were getting from Facebook, while the volume was increasing, they weren't as high quality."
* Pearlman asked about workforce reduction impact. Gudonis replied, "We looked at how can we not impact the company's operations... We took down some headcount there... we're not adding any headcount because until we see that revenue growth, we're staffed up right now to build 80 to 120 devices a month."
* Edward Moon Woo, Ascendiant Capital, inquired about international growth in Germany. Gudonis noted, "it's our strongest growing segment year-to-date... they've got over 100 locations now that are certified on the MyoPro."

SENTIMENT ANALYSIS

* Analysts focused on pipeline quality, lead conversion, O&P channel growth, guidance credibility, and advertising ROI. Tone was probing and slightly concerned, especially regarding pipeline efficiency and guidance adjustments.
* Management maintained a measured yet transparent tone, highlighting challenges and specific corrective actions. Gudonis acknowledged, "We recognize that our recent stock price performance has been disappointing," while Henry confirmed, "I would say we're encouraged by the July results on the metrics."
* Compared to the previous quarter, analyst tone shifted from optimistic to more cautious, and management adopted a more defensive posture when discussing conversion rates and guidance changes.
* Confidence was tempered by recent operational headwinds, but both management and analysts expressed hope for stabilization and improvement.

QUARTER-OVER-QUARTER COMPARISON

* Guidance for 2025 revenue growth revised from 54%-66% to 23%-29%.
* Q2 revenue and units delivered slightly below Q1, with Q2 revenue at $9.7 million and 178 units versus Q1's $9.8 million and 182 units.
* Gross margin decreased from 67.2% in Q1 to 62.7% in Q2, attributed to higher material and overhead costs.
* Operating expenses and advertising spend increased, with cost per pipeline add rising from $2,300 in Q1 to $2,926 in Q2.
* Management's tone shifted from reaffirming guidance to resetting expectations and focusing on operational adjustments.
* Analyst focus moved from growth optimism to concerns about pipeline conversion and authorization rates.

RISKS AND CONCERNS

* Management cited lower lead quality and increased cost per pipeline add as significant challenges.
* Medicare Advantage denials and appeals continue to constrain revenue growth.
* Higher operating expenses and advertising spending weighed on operating loss and cash flow.
* Analyst concerns included the sustainability of pipeline growth, conversion rates, and the impact of cost-cutting measures on future capacity.
* Management's mitigation strategies included shifting advertising channels, expanding clinical referrals, O&P channel growth, and ongoing payer contract negotiations.

FINAL TAKEAWAY

Management detailed a challenging quarter marked by rising costs, lower lead conversion rates, and shifts in payer behavior, resulting in reduced full-year revenue growth guidance. Operational and marketing adjustments have been implemented to address these issues, including cost reductions and a greater focus on clinical referral and O&P channels. While the path to sustainable growth and profitability remains in focus, management acknowledges the operational headwinds and is prioritizing actions aimed at improving efficiency and pipeline quality for the second half of 2025 and beyond.

Read the full Earnings Call Transcript [https://seekingalpha.com/symbol/myo/earnings/transcripts]

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