Hello, and welcome to the Myomo Q3 2023 earnings conference call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star, then one on your touchtone phone. Please note, this event is being recorded. I would like now to turn the conference over to Kim Golodetz. Please go ahead. Thank you, operator, and good afternoon, everyone. This is Kim Golodetz with LHA. Welcome to the Myomo Q3 2023 conference call. Earlier this afternoon, Myomo issued a news release announcing financial results for the three and nine months ended September 30, 2023. If you would like to be added to the company's email distribution list to receive future announcements, please register on the company's website at myomo.com or call LHA at 212-838-3777 and speak with Carolyn Curran. With me on today's call from Myomo are Paul Gudonis, Chief Executive Officer, and Dave Henry, Chief Financial Officer. Before we begin, I'd like to caution listeners that statements made during this conference call by management, other than historical facts, are forward-looking statements. The words anticipate, believe, estimate, expect, intend, guidance, outlook, confidence, target, project, and other similar expressions are typically used to identify such forward-looking statements. These forward-looking statements are not guarantees of future performance and may involve and are subject to certain risks and uncertainties and other factors that may affect Myomo's business, financial condition, and operating results. These and additional risks, uncertainties, and other factors are discussed in Myomo's filings with the Securities and Exchange Commission, including the Form 10-Q for the quarter ended September 30, 2023, which is expected to be filed soon, and subsequent filings. Actual outcomes and results may differ materially from what's expressed in or implied by these forward-looking statements. Except as required by law, Myomo undertakes no obligation to revise or update any forward-looking statements to reflect events or circumstances after the date of this call. It is now my pleasure to turn the call over to Myomo's CEO, Paul Gudonis. Paul, please go ahead. Thanks, Kim. Good afternoon, everyone, and thanks for joining us. We have a lot of news to cover with you today, starting with our Q3 financial results and then last week's updates from the Centers for Medicare and Medicaid Services, CMS, about the MyoPro for patients with Medicare Part B coverage. Today, we're reporting Q3 financial results featuring more than $5 million in product revenue for the first time, which is up 28% year-over-year and up 20% sequentially. This included a record quarter of international revenues, which topped $1 million in a quarter for the first time. Importantly, we are entering the Q4 with 1,046 qualified patients in our pipeline and more than $11 million in cash, which gives us optimism about our growth trajectory. I'm pleased with these results since they validate the strategic shift and the operational changes we implemented at the beginning of the year. We decided to focus on patient candidates who had insurance coverage by payers with a track record of reimbursing for the MyoPro, rather than expending a lot of effort to obtain pre-authorizations from other insurance plans. That's led to a higher authorization rate by payers, including on appeal, with some approvals happening within a few days of submission of the medical documentation to the insurance company. Assuming medical necessity is demonstrated, Medicare Advantage plans, which cover many of these stroke survivors who are seniors aged 65 and up, must provide coverage if CMS is reimbursing for the device. Along with this focus on reliable payers, we reduced our operating expenses by having fewer staff dedicated to reimbursement activity and by cutting our marketing budget by $1 million. These cost savings, along with the increased revenue we've generated, are enabling us to reduce our cash utilization year-over-year as we work through the timetable of having the Medicare Part B rulemaking and the coverage completed. For a deeper dive into our Q3, I'll start with the top line. The year-over-year and sequential growth in product revenues is due to 3 factors. 1, the size of the patient pipeline, which was nearly 1,000 qualified candidates at the beginning of the quarter, meaning they were covered by insurance plans that had consistently paid for MyoPro in the past. 2, the number of units in our backlog, which represented approximately $7 million in potential revenue upon delivery or collection of payment from the payer. Three, the number of new orders received and filled during the quarter for revenue based on the payer mix, what we call the fill units, which was a record number in the quarter. During our last quarterly conference call, I was a bit conservative about our revenue forecast because we had limited visibility into how many insurance authorizations we would receive and what the payer mix might be. As it turned out, we had a record 156 authorizations and orders in the Q3, which is up 20% from the year ago period. We achieved this growth with a 27% reduction in advertising spend compared with the Q3 of 2022, and a 12% reduction in staff engaged in reimbursement activities back in January, as we focused our efforts on payers with a track record of reimbursing the MyoPro. Now for the major news updates. It was a heck of a week for seniors with Medicare Part B, fee-for-service health insurance, as CMS issued two publications concerning the MyoPro brace for patients with muscle weakness and paralyzed arms. On November first, CMS stated that it was reclassifying the MyoPro in the brace benefit category, as we had requested in the public meeting in June 2022, instead of the original Durable Medical Equipment, DME rental category. The MyoPro product line is custom fabricated for each patient and is designed for long-term home use by Medicare beneficiaries. In the brace category, the MyoPro will be reimbursed by Medicare on a lump sum basis, which is the way all other payers, Medicare Advantage, the VA, and commercial plans, reimburse for our devices effective January 1, 2024. That was good news number 1 for Medicare beneficiaries. Then on Friday, November 3, CMS issued the agenda for its upcoming HCPCS Public Meeting, which included the publication of proposed fees for the two MyoPro models. For the MyoPro Model W, which is the elbow-wrist orthosis, coded as L8701, the proposed fee is $31,745. For the MyoPro Model G, which is the elbow-wrist-hand orthosis, the proposed fee is $62,457. These fees are calculated by CMS based on their internal pricing methodology and are consistent with the presentation we made at that June 2022 public hearing. These fees will be considered at the November 29th CMS public meeting, and typically, determinations resulting from a public meeting are published a couple of months later and are effective in the subsequent calendar quarter, which in this case would be April 1, 2024. However, there is no guarantee that these will be the fixed fee amounts, the final fee amounts, or what the effective date will be. While we're waiting for these decisions by CMS staff, we were instructed to present our latest clinical research to the DME MAC medical directors, which we did this past spring. We were also advised to provide devices to Medicare Part B beneficiaries and to file claims for payment. I'm pleased to report that we've now had five Part B claims approved and have received initial rental payments under the current HCPCS codes, which is the first time we've received such payments since our codes went into effect in January 2019. We received multiple monthly rental payments on several of these claims, and importantly, all four of the DME MAC regions have paid for the patient's MyoPro. One additional MyoPro claim is still in process, with the clinical documentation in support of medical necessity still under review. Why all this is significant for Medicare beneficiaries and the company is that Medicare Part B patients should now have access to the MyoPro based on medical necessity and any coverage guidelines that may be issued. We've had to put these Part B patients on hold until now, so going forward, we'll be able to work with their physician and supply our powered arm braces to suitable candidates. We commend CMS on making these braces available to seniors with Part B coverage, as it is a major step towards the goal of health equity. I'll wrap up my opening comments with a few other highlights. Our international operations, led by Germany, achieved a record $1 million of revenues in Q3. We have a growing pipeline of patients interested in MyoPro, a network of 100 O&P clinics across Germany who can provide the MyoPro, and more wins at the German Social Court, which has ruled in favor of patients having access to a MyoPro and requiring the payer to cover the cost of the device due to medical necessity. Our Chinese joint venture company made good progress during the quarter as medical device registrations were submitted to allow the sale of the MARK units, or the mobile arm rehabilitation kits, to rehab hospitals in China, which would be initially used for rehab training purposes, for which the hospitals could generate revenues. In addition, first prototype MARK units are expected off the production line during this Q4. Sales of the MyoPro to individual patients will occur further down the road when the regulatory body approves the device for home use, and we just don't know the timing of such approval at this stage. We completed our second capital raise this year in August, at an 80% premium to the price of our equity offering back in January. I had publicly committed to reducing our cash burn this year while growing the business and working toward Medicare coverage of the MyoPro. Year to date, our cash use in operations is $3.8 million, less than half the burn compared to the cash used in operations of $7.8 million for the same period in 2022. I'll now turn the call over to Dave Henry, Myomo's CFO, with a review of our Q3 financial results. Dave? Thank you, Paul, and good afternoon, everyone. Turning now to our Q3 financial results. Total revenue for the Q1 of 2023 was $5.1 million. This consists entirely of product revenue, which is almost entirely of product revenue, I should say, which is a record for the quarterly product revenue and was up 28% over the prior year quarter. This growth was driven by a record 119 revenue units, offset by a lower average selling price, or ASP. The 119 revenue units in the quarter was an increase of 37% over the prior year. Of the 119 revenue units, approximately 40% resulted from fill, which is our term for authorizations and orders received and converted to revenue in the same quarter. This was a record number of fill units, which was aided by the addition of 2 insurance payers and their affiliates, for which we have accumulated sufficient collection history to enable revenue recognition at the time of MyoPro delivery. Nearly half of our direct billing revenue in the Q3 was from patients with payers, where we were able to recognize revenue at delivery. ASP was approximately $42,700, down 7% from the prior year, as we guided due to payer and channel mix. The direct billing channel represented 69% of revenue in the Q3, compared with 77% in the prior year quarter. International revenue represented 20% of product revenue in the Q2. The remaining 11% of revenue was from the VA and domestic O&P channels, and sales of demo units and MyoPro control units to the JV company in China. Backlog represents insurance authorizations and orders received, but not yet converted to revenue. Our backlog at the end of Q3 2023 was 185 units, which is up 1% from our backlog at the end of Q3 2022. This backlog includes five patients for whom we are receiving rental payments from the DME MACs. We received 156 authorizations and orders for MyoPros in the Q3, an increase of 20% compared with the prior-year quarter. Our patient pipeline increased to 1,046 candidates as of September 30, 2023, up 28% from the year-ago quarter, which has been revised to reflect only known payers. 381 patients were added to our pipeline during the Q3, an increase of 22% over the prior year. The year-ago pipeline additions have also been revised to reflect only known payers. Note that the pipeline does not include Medicare Part B patients, which we're tracking separately for now. We made progress growing the Medicare Part B pipeline in the Q3. Gross margin for the Q3 of 2023 was 68.7%, compared with 66.5% for the prior year quarter. The increase was driven by improved fixed cost absorption on the higher volume, offset by a lower ASP. Operating expenses for the Q3 of 2023 were $5.5 million, an increase of 1% compared with the Q3 of 2022. This modest increase was driven primarily by higher incentive compensation accrual, offset by lower advertising expenses, which decreased 27% compared with the prior year quarter. We're on pace to spend roughly $1 million less on advertising in 2023 than we did in 2022. Our cost per pipeline ad was $2,159, which is down 36% compared with the prior year quarter. Operating loss for the Q3 of 2023 was $2 million, compared with an operating loss of $2.8 million for the Q3 of 2022. Net loss for the Q3 of 2023 was also $2 million, or $0.06 per share. This compares with a net loss of $2.8 million, or $0.40 per share for the Q3 of 2022. Note that the 8.7 million pre-funded warrants issued in our January and August 2023 offerings are considered common stock equivalents under GAAP and are included in our weighted average shares outstanding. None of the pre-funded warrants have been exercised as of today. Adjusted EBITDA for the Q3 of 2023 was a negative $1.7 million, compared with a negative $2.5 million for the Q3 of 2022. To summarize our year-to-date results, revenue for the nine months ended September 30, 2023, was $14.5 million, up 26% over the same period a year ago, while year-to-date product revenue of $12.8 million was up 21%. Year-to-date gross margin was 69.6%, compared with 66.2% in the year ago period. Gross margin on product sales for the nine months ended September 30 was 65.5%. Operating expenses for the first nine months of 2023 were $15.9 million, a decrease of 1% compared with the same period a year ago. Operating loss for the first nine months of 2023 was $5.8 million, compared with an operating loss of $8.4 million for the same period a year ago. Net loss for the first nine months of 2023 was $5.7 million, or $0.21 per share, compared with a net loss of $8.6 million or $1.24 per share for the same period a year ago. Adjusted EBITDA was a -$4.9 million for the first nine months of 2023, compared with a -$7.4 million for the year-ago period. Turning to our cash position, cash, cash equivalents and short-term investments as of September 30, 2023, were $11.1 million. Cash used in operating activities was $1.7 million for the Q3 of 2023, compared with $2.8 million for the prior year quarter. Looking ahead, our backlog is up modestly on both a sequential and year-over-year basis. Assuming a typical quarter were fills in the range of 30%-35% of revenue units, we believe we are positioned to deliver year-over-year revenue growth in the Q4 and full year product revenue growth consistent with the growth through the first nine months, which is within the 20%-30% range we guided to at the beginning of the year. With that financial overview, I'll turn the call back to Paul. Thanks, Dave. Well, we're looking to continue the momentum we've achieved so far this year, and we expect to add additional medically qualified Medicare Part B patients to our pipeline in the Q4, so that we're ready to serve this population after the new brace category rule and the fees go into effect. With that overview, we're now ready to take your questions. Operator? We will now begin the question-and-answer session. To ask a question, you may press star, then one on your touch tone phone. If you are using a speakerphone, please pick up your handset before pressing the keys. To withdraw your question, please press star, then two. At this time, we will pause momentarily to assemble our roster. ... Before we take the first question, I just want to mention that we are available for virtual and in-person investor meetings, so please contact LHA Investor Relations to set up a time. We'll also keep you informed of developments at CMS about the status of the new brace category classification and the proposed fees, which will enable access to MyoPro by Medicare Part B patients. Okay, operator, we're ready for the first question. Our first question comes from Scott Henry, from Roth Capital. Please go ahead. Thank you. Good afternoon and congratulations. Some very well-deserved progress on the reimbursement front. So, great job. Couple questions. I guess first, when I look at the CMS fees, for I believe it's the G and the W, you know, I typically think of this as $35,000-$40,000 ASP. So, you know, that $62,000 kinda looks higher. Is that just a blend, or how do we think about that $62,000 in there? Yeah, well, CMS has its own methodology for calculating fees for new medical devices, and they're required to follow the guidelines using the published retail pricing. So Myomo's ASP that we currently report is not the retail price, but it's a value affected by accounting, calculations, and other factors. And the ASP that we currently have is typically lower than the actual retail pricing. But Scott, the CMS has its own algorithms, what they call the gap-filling methods, where they take retail pricing, they back it up over a period of time, and then they add inflation. And that's where they come to these pricing, which is consistent, by the way, with what we presented at the June 2022 public meeting. Okay, so it sounds like it's within your expectations and you're probably pleased with the levels there. Is that correct? Yes, it's. Again, it's consistent with what we had presented and is very workable to enable access for these Part B beneficiaries. Okay, great. And I noticed you changed the patient pipeline update. Have you included Germany in the past or is that new? And what was the driver? Is Germany likely going to be a material market for you? Just curious on that. Yeah, well- I think, Go ahead, Dave. I was going to say no, I... You know, Germany has always been included in the pipeline. I think, you know, over the last couple of quarters, we've seen the drop rate in the pipeline decrease a bit, and I think that's helped grow the overall pipeline. You know, because the ads have been in that 300-400 range this year as we've been, you know, sort of spending a consistent amount on advertising, you know, each and every quarter. So I think that's what you're seeing from the pipeline, is that, you know, just we're seeing fewer patients are right now dropping out. Okay, great. Final question, $5 million in a quarter. You know, congratulations, that, that's a strong number. As well, you have the 156 orders and authorizations. When we, when we put all that together, the question is: you know, how do we think about cash flow break even, not necessarily, you know, GAAP break even, $7 million in a quarter? Do you think that, that gets you pretty close to, to break even? It seems like, you know, we're starting to get into that ballpark. Appreciate any color on that. Thank you. Yeah, I'd like to sort of defer answer on that. I'd like to see what the final fee is published from CMS. And, you know, with the public meeting is in end of November. Determinations from that meeting should be out by the end of February of 2024. So by the time we get to our Q3, or our Q1, I should say, or Q4 conference call in March of 2024, and we might have a better idea and might be able to provide some more color on that. Okay, fair enough. Thank you for taking the question. The next question comes from Anthony Vendetti of the Maxim Group. Please go ahead. Thank you. Thanks, Paul and Dave. So the meeting that's going to be held on November twenty-ninth, who's going to be attending that meeting? And what's the expectation post that meeting? Is that... It's the payment determination, is the exact amount going to be set then? And then, is the implementation likely to be 1/1/2024? The public meeting is held twice a year. CMS just published the agenda, which is available online. The agenda includes pricing for a number of products, including ours. We're right on the agenda item number 1 with this proposed pricing. Attendees are anyone that wants to submit comments about the proposed pricing or anything else about our product or anybody else's products that are in the agenda. Then after CMS reviews any of those comments, they will typically come out with their final fees and put that into what we call the alphanumeric tables. Usually, this takes them a couple of months, so we don't expect the fees to go into effect until perhaps April first, maybe earlier than that, but that's kind of our current expectation. ... Okay, so you're saying April first, and if it's earlier, great, but that April first is the expectation. And then just in terms of revenue recognition, does this change any of your revenue recognition sort of expectations for 2024, or was this kind of built into what you were expecting? I think as we, you know, if CMS, you know, publishes the fee and we start getting, you know, regularly paid that fee, then we will. Our expectation is that we'll be re-recognizing revenue at delivery for Medicare Part B patients once we can establish collectibility, which is, you know, the requirement under GAAP. You know, we're going to be under, you know, our products will likely be reviewed under what's called individual consideration, so on a case-by-case basis. And we'll see as we go forward in 2024, you know, how they're paying. And then once we feel comfortable, then we'll go ahead and we and our auditors are comfortable, then we'll go ahead and start recognizing revenue on delivery. Okay, Dave, and just from history and doing this for many years, right, establishing collectibility, is it... What I've learned anyway is that auditors typically want to see a full year. Is that what you're expecting, a full year of establishing collectibility, or do you think it could be shorter than that? When we established collectibility for the insurers that I mentioned in my remarks, it was really based on, you know, more of a number of patients. Time, you know, wasn't necessarily a factor. It was seeing a number of patients where if we get an authorization and we bill a claim and deliver, we get paid. We see that happening enough times, regardless of time, you know, that would be the point at which we feel we can take revenue at delivery. More based on number of patients. Do you have a range of what you think that number would be, or hard to say at this point? I mean, I would say it's got to be, you know, a few dozen, certainly. Okay. Okay, and then, you know, based on all the good news in November, right? It, you know, on November first, CMS published a final rule that reclassifies the MyoPro as a brace, and now this. Do you feel like the TAM for the MyoPro has increased in terms of what it was maybe prior to November? It's at least doubled, Anthony, because- Okay ... if you look at, you know, the majority of the stroke population are seniors, and about 50% of seniors are covered by Medicare Advantage plans, and 50% of seniors are on the standard Medicare Part B. And we've only been able to serve that, Medicare Advantage population until now. And so with these Part B patients, if they're medically eligible for the device, you know, that's half of the senior population. So the way I look at it is effectively, our TAM is doubled. Okay, that's helpful. All right, great. Thanks very much. I'll hop back in the queue. The next question comes from Edward Woo with Ascendiant Capital. Please go ahead. Yeah, congratulations on the quarter and especially on international. Should we expect that continued growth rate, high growth rate in Germany, and is there any possibility that it could increase even faster? And, you know, what about possibilities for going outside beyond Germany and the rest of the EU? Well, we've been really pleased with the consistent year-over-year growth of Germany. As I said, it was a record quarter here in recent Q3. We've been building up the distribution network. We've been very successful in getting statutory health insurance payers to cover this. So we can expect we'll have continued growth there in Germany. We're looking at other markets, especially in EU, you know, where we have CE Mark, and we meet the EU MDR rules. The question will be reimbursement. You know, it takes often a year or two to establish reimbursement in some new markets. And so right now, we're basically doubling down and saying, "Look, Germany is a big country, over 80 million population, so let's keep serving the patients in Germany right now as our first priority for Europe. Is there a possibility to, you know, push the, you know, gas pedal a little faster to, you know, take advantage of the opportunity in Germany? Or you feel like you're at a very comfortable pace? Well, we've got a good growth clip over there. You know, it requires more marketing spend, more business development staff, more clinical trainers, and so on. So, you know, we want to go at a good pace, but also do it in a quality manner because we want to make sure we're medically qualifying patients, getting all their documentation, and following up for good outcomes. So, you know, we'll continue to see a good pace of growth there in Germany. Great. Well, thank you and congratulations again. Thank you. Our next question comes from Ben Haynor of Alliance Global Partners. Please go ahead. Good afternoon, gentlemen. Thanks for taking the questions. First off, for me, on the mix between the MyoPro Motion W and Motion G, you know, where does that sit with, you know, your typical in your typical quarter? And do you expect there to be any sort of difference with the Part B population? ... over 90% of our orders are for the MyoPro G. That's the more expensive unit because it includes the grasp, enables greater functionality of ADLs. And, as far as, we expect, you know, it should be pretty similar for the Part B population as well as, other seniors. Okay, great. And then on the payers that may not be covering MyoPro, would you expect them to kind of fall in line now that Medicare has you know made these changes or CMS has made these changes? We expect that that will happen over time. Certainly Medicare Advantage plans are required to provide whatever Medicare Part B does, so we think that will open up additional Medicare Advantage plans to the MyoPro. And then, as you are aware, often commercial plans will follow what Medicare does as well. So over time, we'll be having meetings with various medical directors of these plans, the commercial side as well, about contracting. But certainly we're waiting for this Medicare Part B sort of a blessing. I think it was very important for the overall reimbursement strategy with these other payers. Okay, that makes sense. And then on the Part B patients that you have in your database right now, I guess this maybe is more of a mechanics question, but when might you start including those in the pipeline? Is that something that you disclose to investors? Is that something that we would probably look to hear about, you know, kind of for in the Q1 report, or could it be after that, before that? What's the right way to think about that as you look at it today? Yeah, I think that's a good question. I think, after everything gets finalized at CMS, you know, the brace category rules in place, the fees are published, and so on, and as we continue to build up a patient pipeline or Part B patients, you know, we can be discussing that as well at that time. Okay, got it. Do you think you go and expand the team, given these updates? You know, the benefit category changes, the proposed fee schedule? I mean, it seems like there's a lot of opportunity for you to go after if this, you know, falls into place like it looks like it's going to. Any thoughts on that front? Well, we've already been working on, you know, how do we scale up the business cost effectively? You know, we've got the core infrastructure, you know, with about 110 people now inside the company. But certainly to gear up for the additional volume, we're going to need additional manufacturing staff, maybe a second shift in our current facility. We'll have to order additional inventory for the builds. We'll have to add additional clinical staff in the field, whether it's the CPOs that do the evaluations and fittings, the MyoCare coaches that follow up. So yeah, we've been working on a plan, but we should get operating leverage because we've already invested in the core infrastructure of the team. Okay, got it. That's it for me, gentlemen. Hell of a start to November. Thanks, Ben. Thank you. As a reminder, if you would like to ask a question, please press star, then one. As there are no further questions, this will conclude our question and answer session. I would like to turn the conference back over to Paul Gudonis for any closing remarks. Thanks, operator. I want to thank the new investors that participated in our capital raises this year. We've been able to attract well-regarded fundamental healthcare investors who see the long-term potential of this business, and we've had a number of executives and board members also increase their stock holdings as well. While forecasting quarterly revenues is always a challenge due to the factors I mentioned earlier, such as the number and the timing of insurance authorizations and the payer mix, we are poised for our eleventh consecutive year of revenue growth. We continue to add roughly 400 new candidates into our patient pipeline each quarter, and we enter Q4 with a record number of patients in the pipeline, and we'll be including Part B beneficiaries as we go forward. So we're looking forward to the finalization of the CMS fee schedule and MyoPro in the brace category with an anticipated effective date, the ability to expand our addressable market to include those 50% of seniors in the U.S. with the standard Medicare Part B coverage, a growing international business, especially in Germany and China, and scaling the business with operational efficiency so that we can achieve cash flow break even at higher volumes in the future. Well, thanks for your continued interest in Myomo, and have a good day, everyone. The conference has now concluded. Thank you for attending today, today's presentation. You may now disconnect.