Business Wire | Aug 10, 2020 04:05PM EDT

Myomo Reports 2020 Second Quarter Financial Results

Aug. 10, 2020

CAMBRIDGE, Mass.--(BUSINESS WIRE)--Aug. 10, 2020--Myomo, Inc. (NYSE American: MYO) ("Myomo" or the "Company"), a wearable medical robotics company that offers increased functionality for those suffering from neurological disorders and upper-limb paralysis, today announced financial results for the three and six months ended June 30, 2020.

Financial and operational highlights for the second quarter of 2020 include the following (all comparisons are with the second quarter of 2019, unless otherwise noted):

* Revenue was $0.9 million, down 2% and exceeded the expected revenue range announced on June 22nd as deliveries strengthened and average selling prices increased as the U.S. economy began to re-open during the second half of the quarter. * Revenue from direct billing increased 329% and represented 50% of total revenue for the quarter * Operating expenses were $3.3 million, compared with $3.2 million for the second quarter of 2019 and $4.1 million for the first quarter of 2020 * The reimbursement pipeline had more than 700 MyoPro units as of June 30, 2020, as nearly 200 candidates entered the pipeline in the second quarter * MyoPro direct billing pipeline now represents 69% of total pipeline units, and more than 85% of new candidates entering the pipeline during the second quarter are to be directly billed to insurance payers * Backlog, which represents insurance authorizations received but not yet converted to revenue, was 120 units as of June 30, 2020, a 50% increase, compared with 80 units as of March 31, 2020

Management Commentary

"Despite nationwide COVID-19 restrictions in place during much of the second quarter, I am pleased that revenues significantly rebounded by the end of the quarter and were roughly flat compared with the same period last year," stated Paul R. Gudonis, Myomo's chairman and chief executive officer. "We also continued to grow our pipeline and authorizations backlog via telehealth and social media marketing, while controlling our operating expenses. Myomo entered the second half of the year with a record backlog of MyoPro's to provide to patients and to submit for payment," he added.

Financial Results

For the Three Period-to-Period For the Six Months Period-to-Period Months Change Ended June 30, Change Ended June 30, 2020 2019 $ % 2020 2019 $ %

$ $ $ (2)% $ $ $ 156,320 9%Revenue 858,590 880,349 (21,759) 1,866,735 1,710,415

Cost of 418,862 380,093 38,769 10% 737,513 666,895 70,618 11%revenueGross $ $ $ (12)% $ $ $ 85,702 8%profit 439,728 500,256 (60,528) 1,129,222 1,043,520

Gross 51% 57% (6)% 60% 61% (1)%margin

Revenue for the second quarter of 2020 was $0.9 million, a decrease of 2% compared with the second quarter of 2019 as a higher average selling price mostly offset a lower number of revenue units. Year-to-date revenue of $1.9 million, was up 9% over the prior year period.

Gross margin for the second quarter of 2020 was 51%, compared with 57% for the second quarter of 2019. The decrease primarily reflects the cost of revenues recognized in the second quarter for deliveries at the end of the quarter which are expected to be recognized as revenues in future periods, as well as increased warranty reserves. Year-to-date gross margin was 60%, down slightly compared to the prior year period.

Operating expenses for the second quarter of 2020 were $3.3 million, an increase of 3% over the second quarter of 2019 and a decrease of 20% compared with the first quarter of 2020. The year-over-year increase primarily reflects higher compensation costs associated with the addition of sales, customer service and reimbursement personnel, offset by payroll and other cost reductions in response to COVID-19. Year-to-date operating expenses were $7.4M, an increase of 15% over the comparable period a year ago.

Operating loss for the second quarter of 2020 increased to $2.8 million from $2.7 million for the second quarter of 2019. Net loss for the second quarter of 2020 was $3.3 million, or $1.12 per share, compared with a net loss of $2.6 million, or $4.50 per share, for the same period of 2019. Year-to-date operating and net losses were $6.3 million and $7.1 million, respectively. Net losses for the second quarter and first half of 2020 include charges of $0.3 million and $0.5 million, respectively, related to the partial extinguishment of the Company's convertible note.

Adjusted EBITDA1 for the second quarter of 2020 was negative $2.7 million, compared with negative $2.5 million for the second quarter of 2019. Year-to-date Adjusted EBITDA was a negative $6.0 million, compared to a negative $4.8 million in the same period a year ago. A reconciliation of GAAP net loss to this non-GAAP financial measure appears below.

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1 Adjusted EBITDA is earnings before interest, taxes, depreciation and amortization adjusted for stock-based compensation expense, the impact of the fair value revaluation of derivative liabilities and loss on extinguishment of debt.

Business Outlook

"We expect to deliver a record number of MyoPro's in the third quarter as we serve our growing backlog, which should result in significantly increased revenue in the months ahead," stated Mr. Gudonis. "We have provided our staff with personal protective equipment (PPE) and training on proper and safe procedures, and we have PPE available for patients during the MyoPro delivery process. We continue to experience strong demand for our product line while adding new initiatives such as the recently launched MyoCare(tm) program. We plan to continue to grow the pipeline of MyoPro candidates and seek insurance reimbursement so that our customers may achieve greater independence, perform activities of daily living and reduce their overall healthcare costs."

Liquidity

Cash and cash equivalents as of June 30, 2020 were $10.7 million. Cash utilization was $3.7 million in the second quarter of 2020. Cash utilization was greater than prior quarters due to higher cash used for working capital as cash inflows slowed as a result of the impact of COVID-19, while liabilities were paid down. Cash utilization is expected to be at the low end of the Company's usual quarterly range of $2.4 million to $3.0 million in the third quarter. If public health and travel restrictions are not re-imposed due to the spread of COVID-19, the Company believes it has sufficient cash to meet its operating requirements for at least the next 12 months. However, if public health and travel restrictions are re-imposed, the Company may require additional capital to fund its operations during the second half of 2021.

Conference Call and Webcast Information

Myomo will hold a conference call today at 4:30 p.m. ET. We encourage participants to pre-register for the conference call using the following link: http://dpregister.com/10146691. Callers who pre-register will be given a conference passcode and unique PIN to gain immediate access to the call and bypass the live operator. Participants may pre-register at any time, including up to and after the call start time. Those without internet access or unable to pre-register may dial in by calling, 1-844-707-6932 (U.S.) or 1-412-317-9250 (International). A webcast of the call may also be accessed at Myomo's Investor Relations page at http://ir.myomo.com/.

A replay of the webcast will be available beginning approximately one hour after the completion of the live conference call at http://ir.myomo.com/. A dial-in replay of the call will be available until August 24, 2020; please dial 1-877-344-7529 (U.S.) or 1-412-317-0088 (International) and provide the passcode #10146691.

Non-GAAP Financial Measures

Myomo has provided in this press release financial information that has not been prepared in accordance with generally accepted accounting principles in the United States, or GAAP. This information includes Adjusted EBITDA. This non-GAAP financial measure is not in accordance with, or an alternative for, GAAP and may be different from similar non-GAAP financial measures used by other companies. Myomo believes that the use of this non-GAAP financial measure provides supplementary information for investors to use in evaluating operating performance and in comparing Myomo's financial measures with other companies in its industry, many of which present similar non-GAAP financial measures. Adjusted EBITDA is EBITDA adjusted for stock-based compensation expense, the impact of the fair value revaluation of derivative liabilities and loss of extinguishment of debt. This non-GAAP financial measure is not meant to be considered superior to or a substitute for results of operations prepared in accordance with GAAP, and should be viewed in conjunction with GAAP financial measures. Investors are encouraged to review the reconciliation of this non-GAAP measure to its most directly comparable GAAP financial measure. A reconciliation of GAAP to the non-GAAP financial measures has been provided in the tables included as part of this press release.

About Myomo

Myomo, Inc. is a wearable medical robotics company that offers improved arm and hand function for those suffering from neurological disorders and upper-limb paralysis. Myomo develops and markets the MyoPro product line. MyoPro is a powered upper-limb orthosis designed to support the arm and restore function to the weakened or paralyzed arms of certain patients suffering from CVA stroke, brachial plexus injury, traumatic brain or spinal cord injury, ALS or other neuromuscular disease or injury. It is currently the only marketed device that, sensing a patient's own EMG signals through non-invasive sensors on the arm, can restore an individual's ability to perform activities of daily living, including feeding themselves, carrying objects and doing household tasks. Many are able to return to work, live independently and reduce their cost of care. Myomo is headquartered in Cambridge, Massachusetts, with sales and clinical professionals across the U.S. and representatives internationally. For more information, please visit www.myomo.com.

Forward-Looking Statements

This press release contains forward-looking statements regarding the Company's future business expectations, including the impact of COVID-19 on the Company's revenues in the third quarter of 2020 and beyond, its current authorization backlog and its cash runway, which are subject to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are only predictions and may differ materially from actual results due to a variety of factors.

These factors include, among other things:

* the direct and indirect impact of the novel coronavirus (COVID-19) on our business and operations, including fabrication and delivery, sales, patient consultations, supply chain, manufacturing, insurance reimbursements and employees; * our ability to continue normal operations and patient interactions in order to cast, deliver and fit our custom-fabricated device; * our sales and commercialization efforts; * our ability to achieve reimbursement from third-party payers for our products; * our dependence upon external sources for the financing of our operations, to the extent that we do not achieve or maintain cash flow breakeven; * our ability to effectively execute our business plan and scale up our operations; * our expectations as to our development programs, and; * general market, economic, environmental and social factors that may affect the evaluation, fitting, delivery and sale of our products to patients.

More information about these and other factors that potentially could affect our financial results is included in Myomo's filings with the Securities and Exchange Commission, including those contained in the risk factors section of the Company's annual report on Form 10-K, quarterly reports on Form 10-Q and other filings with the Commission. The Company cautions readers not to place undue reliance on any such forward-looking statements, which speak only as of the date made. Although the forward-looking statements in this release of financial information are based on our beliefs, assumptions and expectations, taking into account all information currently available to us, we cannot guarantee future transactions, results, performance, achievements or outcomes. No assurance can be made to any investor by anyone that the expectations reflected in our forward-looking statements will be attained, or that deviations from them will not be material and adverse. The Company disclaims any obligation subsequently to revise any forward-looking statements to reflect events or circumstances after the date of such statements or to reflect the occurrence of anticipated or unanticipated events.

(tables to follow)

MYOMO, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

For the Three Months Ended For the Six Months Ended June June 30, 30, 2020 2019 2020 2019

Revenue $ 858,590 $ 880,349 $ 1,866,735 $ 1,710,415

Cost of revenue 418,862 380,093 737,513 666,895

Gross profit 439,728 500,256 1,129,222 1,043,520

Operatingexpenses:Research and 397,811 427,573 904,764 873,921 developmentSelling, general 2,890,464 2,779,027 6,495,432 5,558,739 andadministrative 3,288,275 3,206,600 7,400,196 6,432,660

Loss from (2,848,547 ) (2,706,344 ) (6,270,974 ) (5,389,140 )operations Other expense(income)Change in fairvalue of (39,717 ) (99,449 ) (121,818 ) (141,420 )derivativeliabilitiesInterest(income) expense 88,915 (41,568 ) 224,124 (84,333 )and otherexpense, netNon-cashinterest 40,025 - 206,668 - expense, debtdiscountLoss on 348,079 - 507,281 - extinguishmentof debt 437,302 (141,017 ) 816,255 (225,753 )

Loss before (3,285,849 ) (2,565,327 ) (7,087,229 ) (5,163,387 )income taxesIncome tax 1,085 - 1,698 - expenseNet loss $ (3,286,934 ) $ (2,565,327 ) $ (7,088,927 ) $ (5,163,387 )

Deemed dividend - - 670,632 797,637 on repricing ofwarrants Net lossattributable to $ (3,286,934 ) $ (2,565,327 ) $ (7,759,559 ) $ (5,961,024 )commonstockholders Weighted averagenumber of commonsharesoutstanding:Basic and 2,932,570 570,184 2,376,332 534,452 dilutedNet loss pershareattributable tocommonstockholders (1)Basic and $ (1.12 ) $ (4.50 ) $ (3.27 ) $ (11.15 )diluted (1) Share and per share amounts have been restated to give effect to theCompany's 1-for-30 reverse stock split effected January 30, 2020

MYOMO, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

June 30, December 31, 2020 2019

(unaudited)ASSETSCurrent Assets:Cash and cash equivalents $ 10,733,419 $ 4,465,455

Accounts receivable, net 310,517 424,287

Inventories, net 678,906 439,533

Prepaid expenses and other current assets 920,383 820,206

Total Current Assets 12,643,225 6,149,481

Restricted cash 75,000 75,000

Deferred offering costs - 219,240

Equipment, net 109,880 154,972

Total Assets $ 12,828,105 $ 6,598,693

LIABILITIES AND STOCKHOLDERS' EQUITYCurrent Liabilities:Current note payable, net of discount of $ 996,841 $ 1,763,887 $71,360 and $676,703 at June 30, 2020 andDecember 31, 2019, respectivelyAccounts payable and accrued expenses 1,688,691 1,738,450

Derivative liabilities 888 378,239

Deferred revenue 1,495 2,913

Customer advance payments 340 40

Total Current Liabilities 2,688,255 3,883,529

Long-term debt, net of discount of $36,169 at - 888,961 December 31, 2019Deferred revenue 8,700 1,495

Other long-term liabilities 77,892 -

Total Liabilities 2,774,847 4,773,985

Commitments and ContingenciesStockholders' Equity:Common stock 322 57

Additional paid-in capital 73,274,309 57,957,097

Accumulated deficit (63,214,909 ) (56,125,982 )

Treasury stock, at cost (6,464 ) (6,464 )

Total Stockholders' Equity 10,053,258 1,824,708

Total Liabilities and Stockholders' Equity $ 12,828,105 $ 6,598,693



MYOMO, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

Six Months Ended June 30, 2020 2019

CASH FLOWS FROM OPERATING ACTIVITIESNet loss $ (7,088,927 ) $ (5,163,387 )

Adjustments to reconcile net loss to net cashused in operations:Depreciation 53,021 45,076

Stock-based compensation 229,490 593,353

Bad debt expense 45,839 -

Non-cash interest expense, debt discount 206,668 -

Amortization of original issue discount and debt 143,026 - restructuring feeLoss on extinguishment of debt 507,281 -

Change in fair value of derivative liabilities (121,818 ) (141,420 )

Loss on disposal of asset 177 2,481

Other non-cash charges (2,980 ) 12,606

Changes in operating assets and liabilities:Accounts receivable 67,931 51,245

Inventories (243,336 ) (195,397 )

Prepaid expenses and other current assets (100,128 ) (161,014 )

Other assets 57,987 23,574

Accounts payable and accrued expenses 51,292 (473,118 )

Deferred revenue 5,787 (1,420 )

Other liabilities 77,892 -

Net cash used in operating activities (6,110,798 ) (5,407,421 )

CASH USED IN INVESTING ACTIVITIES (7,878 ) (34,903 )

CASH PROVIDED BY FINANCING ACTIVITIES 12,386,663 5,570,401

Effect of foreign exchange rate changes on cash (23 ) -

Net increase in cash, cash equivalents and 6,267,964 128,077 restricted cash Cash, cash equivalents and restricted cash, 4,540,455 6,615,794 beginning of period Cash, cash equivalents and restricted cash, end $ 10,808,419 $ 6,743,871 of period

MYOMO, INC.

RECONCILIATION OF GAAP NET LOSS TO ADJUSTED EBITDA

(unaudited)

For the Three Months For the Six Months Ended June 30, Ended June 30, 2020 2019 2020 2019

GAAP net loss $ (3,286,934 ) $ (2,565,327 ) $ (7,088,927 ) $ (5,163,387 )

Adjustments toreconcile toAdjustedEBITDA:Interest(income) 88,915 (41,568 ) 224,124 (84,333 )expense andother expense,netNon-cashinterest 40,025 - 206,668 - expense, debtdiscountLoss on 348,079 - 507,281 - extinguishmentof debtDepreciation 26,633 23,449 53,021 45,076 expenseStock-based 106,281 197,028 229,490 593,353 compensationChange in fairvalue of (39,717 ) (99,449 ) (121,818 ) (141,420 )derivativeliabilitiesIncome tax 1,085 - 1,698 - expenseAdjusted $ (2,715,633 ) $ (2,485,867 ) $ (5,988,463 ) $ (4,750,711 )EBITDA

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CONTACT: For Myomo: ir@myomo.com

CONTACT: Investor Relations: Kim Sutton Golodetz LHA Investor Relations kgolodetz@lhai.com 212-838-3777

CONTACT: Public Relations: Kate McCann Matter Communications myomo@matternow.com