Executive Summary / Key Takeaways

• Myomo is leveraging recent Medicare Part B coverage for its MyoPro myoelectric orthotics, opening access to a significant portion of the U.S. market and driving record revenue growth in its direct billing channel.
• The company's proprietary technology, enabling user-initiated movement via muscle signals, provides a key competitive differentiator over traditional orthotics and positions it as a leader in the emerging robotic orthotics category.
• A multi-channel strategy, combining a rapidly scaling direct billing operation with the development of a new Orthotics and Prosthetics (O&P) provider network, is central to Myomo's plan to expand reach and accelerate future revenue growth, particularly in the second half of 2025.
• Despite facing challenges with Medicare Advantage authorization denials and temporary impacts on advertising efficiency, Myomo reaffirmed its full-year 2025 revenue guidance of $50 million to $53 million, signaling confidence in its growth trajectory.
• Significant investments in advertising, headcount, manufacturing capacity, and R&D are expected to result in negative operating cash flow through Q3 2025, with a projected return to positive operating cash flow by Q4 2025, funded by recent capital raises.

Restoring Independence: Myomo's Journey and Technological Edge

Myomo, Inc. is a wearable medical robotics company dedicated to restoring independence for individuals suffering from upper-limb paralysis due to neuromuscular disorders like stroke, brachial plexus injury, traumatic brain injury, and spinal cord injury. Founded in 2004 with technology originating from MIT and Harvard Medical School collaborations, the company initially focused on rehabilitation therapy devices. A pivotal shift in 2012 introduced the MyoPro product line, repositioning Myomo to provide assistive orthotics for daily living in home and community settings, delivered through Orthotics and Prosthetics (O&P) providers and, increasingly, directly to patients.

At the heart of Myomo's offering is its proprietary myoelectric control system. This technology utilizes non-invasive sensors to detect faint muscle signals on the skin's surface. These signals are then processed to control the powered movement of the MyoPro brace, enabling users to self-initiate and control the movement of their partially paralyzed limb. This represents a significant technological leap over traditional static orthotics, which merely support the limb without enabling active function. The MyoPro allows users to perform a wide range of functional tasks, from opening a refrigerator door and carrying objects (MyoPro Motion W) to grasping and releasing items (MyoPro Motion G).

The tangible benefits of this technology are critical for patients and form a core competitive advantage. Clinical studies cited by the company indicate that the MyoPro can help users regain the ability to complete functional tasks and may lead to improvements such as increased active range of motion and reduced spasticity. While specific quantitative comparisons on metrics like energy efficiency or response time relative to all alternatives are not detailed in the latest filings, the fundamental benefit lies in empowering patients to use their own neural signals to control movement, fostering greater independence and dignity.

Myomo has continuously evolved its product line, introducing upgrades like the MyoPro 2.0, MyoPro 2+, and most recently, the MyoPro 2x in early 2025. The MyoPro 2x aims to improve independent device use and support daily functional tasks, incorporating feedback from real-world patient and clinical experience. The company is also actively investing in R&D to develop the next-generation MyoPro 3 platform and other enhancements, with stated goals to improve functional capabilities and potentially open new patient populations in the future. These ongoing innovation efforts are intended to build upon Myomo's first-mover advantage and strengthen its competitive moat.

Capitalizing on a Market Inflection Point: The Medicare Catalyst

The U.S. market for devices assisting individuals with chronic upper-limb paralysis is substantial. For years, a significant barrier to accessing advanced orthotics like the MyoPro for many patients was inconsistent or absent reimbursement from major payers, particularly standard Medicare Part B.

A transformative development occurred with the CMS final rule effective January 1, 2024, which reclassified the MyoPro into the brace benefit category, allowing for lump sum reimbursement. This was followed by the publication of specific payment determinations effective April 1, 2024, with updated fees for 2025 set at approximately $34,300 for the Motion W and $67,500 for the Motion G. This decision by CMS was a critical inflection point, opening access to approximately 50% of the addressable market that Myomo previously had to turn away.

This newfound access to Medicare Part B beneficiaries has been the primary driver of Myomo's recent record-breaking performance. In the first quarter of 2025, Medicare Part B patients represented 59% of total revenue, fueling a 162% year-over-year increase in total revenue to $9.83 million. This growth was also supported by a higher average selling price (ASP), which reached approximately $54,000 in Q1 2025, reflecting the impact of the published Medicare fees. The increased volume and higher ASP contributed to a significant improvement in gross margin, which rose to 67.2% in Q1 2025 compared to 61.2% in the prior year period, also benefiting from greater absorption of fixed costs.

The Multi-Channel Strategy: Direct Billing and O&P Expansion

Myomo's strategy to capitalize on the expanded market opportunity revolves around a multi-channel approach, centered on scaling its direct billing operation while simultaneously building out a new O&P provider network.

The direct billing channel, where Myomo handles the entire process from patient lead to insurance billing, remains the primary engine for revenue growth. In Q1 2025, this channel accounted for 79% of total product revenue. To fuel this growth, the company is making significant investments, planning to nearly double its advertising expenses in 2025 to over $6 million. This increased spending is aimed at driving lead generation and adding medically qualified candidates to the patient pipeline, which reached a record 700 additions in Q1 2025, ending the quarter with a record nearly 1,500 patients in process. While temporary challenges with social media advertising algorithms impacted lead generation and increased the cost per pipeline add in early Q1 2025, management reported successfully adjusting its approach, leading to improved efficiency and record leads in April.

Supporting the expected increase in patient volume requires expanding operational capacity. Myomo has significantly increased headcount across its clinical, reimbursement, and manufacturing functions, hiring 100 people in 2024 to reach 190 employees by year-end and planning further additions in 2025. The company also completed its move to a new, larger 35,000 sq ft facility in Burlington, Massachusetts, in January 2025, which has increased manufacturing capacity to 120 units per month, with plans for further floor space expansion to meet future demand. This focus on capacity ensures the company can process a higher volume of patients through its revenue cycle, which has seen increased velocity, particularly for Medicare Part B patients, with approximately 90% of Q1 2025 revenue recognized at shipment or delivery.

Alongside the direct billing expansion, Myomo is strategically building out an O&P distribution channel. This involves recruiting and training O&P practitioners to become certified MyoPro Centers of Excellence. By Q1 2025, the company had trained over 300 CPOs, exceeding its initial goal. This channel is seen as a scalable way to expand reach by leveraging existing clinical networks that already serve the target patient population. While O&P revenue was $475,000 in Q1 2025, management expects growth from this channel to accelerate meaningfully in the second half of 2025 as more trained clinics build their patient pipelines and navigate the reimbursement process. Although this channel may have a potentially lower ASP compared to direct billing, it is expected to offer operating margin accretion due to lower incremental operating expenses.

International sales, primarily from Germany, also contribute to revenue, representing 13% of the total in Q1 2025 with 42% year-over-year growth. Myomo is investing in its German operations but is deferring aggressive expansion into other international markets to focus on the U.S. opportunity. A joint venture in China is pursuing regulatory approval and clinical trials, with potential for sales later.

Financial Health and Outlook

Myomo has historically incurred net losses and negative cash flows as it invested in developing its technology and building its commercial infrastructure. This trend continued in Q1 2025, with a net loss of $3.47 million and cash used in operating activities of $2.68 million. However, this represents a narrowing of the net loss compared to Q1 2024 ($3.84 million) and reduced cash burn from operations ($3.25 million in Q1 2024). The company achieved a significant milestone in Q4 2024, reporting positive operating cash flow ($3.4 million) and free cash flow ($2.5 million) for the first time.

As of March 31, 2025, Myomo held $21.5 million in cash, cash equivalents, and short-term investments. The company has historically funded operations through equity and debt financings, including a public offering in December 2024 that generated $15.80 million net proceeds and a registered direct offering in January 2024 that raised $5.40 million net. Additionally, the company has access to a $4.00 million revolving line of credit and a $3.00 million term loan facility with Silicon Valley Bank, both undrawn as of the latest filing, providing further liquidity.

Management's operating plans for 2025 involve significant investments in advertising, headcount, and capacity expansion to drive growth in the direct billing and O&P channels. These investments are expected to result in negative cash flows for at least the first three quarters of 2025, with Q2 2025 anticipated to have the highest cash burn due to incentive compensation payments and higher operating expenses associated with capacity additions.

Despite the Q1 challenges with advertising efficiency and Medicare Advantage authorizations, Myomo reaffirmed its full-year 2025 revenue guidance of $50 million to $53 million, representing substantial growth of 54% to 66% over 2024 revenue of $32.6 million. The company expects Q2 2025 revenue to be between $9.0 million and $9.5 million, a modest sequential decrease from Q1 but still representing 20% to 26% year-over-year growth. The full-year guidance implies a significant acceleration in revenue growth in the second half of 2025, consistent with historical seasonality and management's expectation for the O&P channel ramp-up and the impact of increased advertising spend on the patient pipeline. Based on achieving these revenue objectives, Myomo continues to expect a return to positive operating cash flow by the fourth quarter of 2025.

Competitive Landscape and Key Risks

Myomo operates in the emerging field of wearable medical robotics for upper-limb paralysis, positioning itself as a leader in this niche. Its primary competitive advantage lies in its proprietary myoelectric control technology, which offers user-initiated movement based on muscle signals, differentiating it from traditional static orthotics and providing a distinct value proposition for patients seeking to regain functional independence. The company also benefits from regulatory approvals (FDA, CE Mark), established commercial operations, and growing reimbursement traction, giving it a first-mover advantage. Its multi-channel strategy, combining direct patient outreach with O&P provider engagement and international sales, creates a broad footprint.

Direct competitors in the wearable robotics space include companies like Ekso Bionics (EKSO) and ReWalk Robotics (LFWD), which offer exoskeletons, sometimes with upper-limb capabilities. Larger medical device companies like Globus Medical (GMED) also have robotics divisions that may overlap. While precise, directly comparable market share figures for all niche competitors are not publicly detailed, Myomo's focus on non-invasive, EMG-controlled orthotics for daily living provides a specific market positioning that contrasts with competitors often focused on more extensive exoskeletons for clinical rehabilitation or full-body mobility. Myomo's competitive advantages include its specialized technology and unique distribution channels like the VA system. However, it faces disadvantages related to its smaller scale compared to larger players like GMED, which can impact costs and market reach. Barriers to entry, particularly the complex regulatory approval process, favor established players like Myomo.

Key risks to Myomo's investment thesis include the ongoing challenges with Medicare Advantage and certain commercial payers. These payers continue to deny or delay authorizations for a large percentage of physician orders, forcing the company into lengthy appeals processes, including administrative law judge hearings. This utilization management by payers negatively impacts authorization rates and revenue growth, as seen in Q1 2025 where authorizations were only up 18% year-over-year. While Myomo is actively working to secure in-network contracts (now covering 25 million lives) and advocating against denials, this remains a significant hurdle.

Changes in direct-to-consumer advertising platforms, such as the algorithm changes implemented by Meta (META) in early 2025, can also adversely impact lead generation and increase advertising costs, temporarily affecting pipeline growth as experienced in Q1. Furthermore, the company identified a material weakness in its internal control over financial reporting as of December 31, 2024, related to IT general controls. While remediation efforts are underway, this weakness could potentially impact the reliability of financial reporting until fully resolved. Other risks include potential changes in CMS policies, political/trade developments like tariffs (though currently estimated to have minimal impact), and the ability to scale operations and manage supply chain effectively to meet growing demand.

Conclusion

Myomo stands at a pivotal point, having successfully navigated the complex path to securing Medicare Part B coverage for its MyoPro device. This achievement has unlocked a significant market opportunity and is driving substantial revenue growth, validating the company's long-term strategy and the clinical value of its proprietary technology. The MyoPro's ability to empower individuals with chronic upper-limb paralysis through intuitive, muscle-signal-controlled movement provides a compelling differentiator in the wearable medical robotics landscape.

While challenges persist, particularly with Medicare Advantage reimbursement hurdles and the need to continuously optimize its growth engine, Myomo's strategic response is clear: aggressively scale the direct billing channel through increased investment and capacity expansion, while simultaneously cultivating the O&P provider network for broader reach. The reaffirmation of robust full-year 2025 revenue guidance, despite early-year headwinds, reflects management's confidence in the underlying demand, the effectiveness of its adjusted strategies, and the operational readiness to support accelerated growth in the latter half of the year. For investors, the story centers on Myomo's ability to execute on its multi-channel strategy, overcome reimbursement friction, and translate its technological leadership into sustained revenue growth and a return to profitability, capitalizing on the transformative access provided by Medicare.