Myomo (NYSE: MYO) reported Q1 EPS of ($2.51), $0.45 worse than the analyst estimate of ($2.06). Revenue for the quarter came in at $1 million versus the consensus estimate of $850 thousand.

Financial and operational highlights include the following (all comparisons are with the first quarter of 2019 unless otherwise noted):

• Revenue was $1.0 million, up 21% compared with $0.8 million.
• Revenue from direct billing was a record 62% of total revenue, compared with 26% of total revenue.
• Gross margin increased 300 basis points to 68.4% from 65.4%.
• The reimbursement pipeline contained more than 700 MyoPro units as of March 31, 2020, compared with 594 units as of December 31, 2019.
• 72% of the MyoPro pipeline now represents direct billing units and more than 90% of the new candidates entering the pipeline during the first quarter are to be directly billed to insurance payers.
• Backlog, which represents insurance authorizations received but not yet converted to revenue, was 80 units as of March 31, 2020, a 51% increase compared with 53 units as of December 31, 2019; approximately 30% of the December 31, 2019 backlog was converted into revenue in the first quarter.

Management Commentary

“I’m pleased we were able to deliver solid topline financial results and a growing backlog in this challenging environment, where MyoPro fittings have been delayed by efforts to contain the coronavirus,” said Paul R. Gudonis, Myomo’s chairman and chief executive officer. “Our focus during the second quarter is to continue to grow our pipeline and authorizations backlog via telehealth and social media marketing, while reducing our spending as we wait for public health and travel restrictions to be eased so that we can resume fitting and delivering our MyoPro product to the growing number of patients in the queue.”

Financial Outlook

“As a result of public health mandates and travel restrictions that are temporarily constraining our revenues, we expect second quarter revenue to be substantially below first quarter revenue,” said Mr. Gudonis. “We have taken actions to reduce payroll and other costs by over $500,000 in the second quarter in order to minimize the cash burn, which nonetheless is expected to be higher in the quarter due to expected usage of cash for working capital. We are hopeful that operations will return to a more normal pace in the coming weeks. Until then, we continue to have success in building our authorization backlog, which currently stands at a record 100 MyoPro units that we intend to deliver and convert into revenue as rapidly as possible once conditions allow.”

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