Myomo (NYSE: MYO) reported Q4 EPS of ($4.81), $0.22 worse than the analyst estimate of ($4.59). Revenue for the quarter came in at $1.5 million versus the consensus estimate of $1.31 million.

Financial and operational highlights include:

• Revenue for the fourth quarter was $1.5 million, up 71% compared with $0.9 million for the prior year quarter. Revenue for 2019 was $3.8 million, up 57% over 2018.
• Revenue from direct billing for the fourth quarter was 50% of total revenue, compared with 23% of total revenue in the prior year. Direct billing channel revenue for 2019 was 33% of total revenue, compared with 15% of total revenue for 2018.
• Gross margin for the fourth quarter increased 590 basis points to 80.5% from 74.6% in the prior year. Gross margin for 2019 was 76.1%, compared with 70.2% for 2018.
• The Company’s reimbursement pipeline contained 594 MyoPro units as of December 31, 2019, up 12% from 528 units as of September 30, 2019. The net increase was driven by 193 additions in the fourth quarter of 2019.
• At the end of the fourth quarter there were 331 direct billing units, or 56% of the MyoPro pipeline; 81% of the new candidates entering the pipeline in the fourth quarter are to be directly billed to insurance payers.
• Backlog, which represents insurance authorizations received, but not converted to revenue, was 53 units as of December 31, 2019, compared with 61 units as of September 30, 2019. More than 40% of the ending third quarter backlog was converted into revenue in the fourth quarter.
• In February 2020, the Company announced that Statutory Health Insurance in Germany will reimburse the MyoPro on a case-by-case basis.
• In February 2020, the Company announced that it joined HOMELINK’s billing network, which allows the Company to bill claims that would otherwise be out-of-network to the 1,200 payers in its network.
• In February 2020, the Company raised net proceeds of approximately $13.7 million in a $15.0 million underwritten public offering of common stock and warrants. The proceeds are being used for the repayment of 50% of the outstanding balance of its $3.3 million term loan with Chicago Venture Partners working capital and other general corporate purposes.

Management commentary

“The strategic actions we have taken over the last 18 months -– digital B2C marketing directly to patients, adding the Direct Billing channel in addition to distribution via orthotics and prosthetics providers, and product cost reductions -- have led to strong revenue growth and expansion of product margins,” said Paul R. Gudonis, chairman and chief executive officer. “We enter the new year with a record number of MyoPro units in the reimbursement pipeline, with a growing share of these opportunities in our Direct Billing channel, which offers us higher revenue and margin per unit.”

Financial Outlook

“Our financial results for the fourth quarter reflect the important steps we have taken to bring MyoPro to more patients as the only option to improve their upper-extremity functionality and quality of life. Our revenues, stimulated by our new, high-margin, direct-billing channel, grew dramatically,” added Mr. Gudonis. “Building on this momentum, we expect to achieve significant revenue growth in 2020 due to the size of the reimbursement pipeline and the growing number of new patient leads we are generating. However, as we typically experience, first quarter 2020 revenue is expected to be lower sequentially and similar to the first quarter of 2019 due to a lower backlog conversion rate in the quarter. Our longer-term target is to reach cash flow breakeven on a quarterly basis by the fourth quarter of 2021.”

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