MYO

Business Context and Reporting Period

Company: MYOMO, INC. (MYO)
Filing Type: Form 10-Q (Quarterly Report)
Reporting Period: Quarter and six months ended June 30, 2026
Business Overview: Myomo is a wearable medical robotics platform company developing myoelectric orthotics (MyoPro) for patients with neuromuscular disorders. The company sells directly to patients (billing insurance/Medicare), to Orthotics and Prosthetics (O&P) providers, and to the Veterans Health Administration.

Key Financial Metrics

Material Changes vs. Prior Period

• Revenue Growth: Revenue increased 21% year-over-year for the quarter and 12% for the six-month period, driven by higher unit volume and increased average selling prices.
• Margin Expansion: Gross margin improved significantly to 72.1% (Q2 2026) from 62.7% (Q2 2025), attributed to higher average selling prices and manufacturing cost reductions.
• Operating Expenses: Total operating expenses remained relatively flat year-over-year. Research and Development (R&D) expenses decreased by 14% (Q2) and 12% (6-month) due to lower labor costs. Selling, Clinical, and Marketing expenses increased slightly (1% Q2, 5% 6-month) due to new clinical sales personnel and incentive compensation.
• Other Expenses: Other expense (income) net shifted from income of $0.11 million in Q2 2025 to an expense of $1.74 million in Q2 2026. This was primarily driven by a $1.20 million loss on the change in fair value of derivative liabilities related to the Avenue Capital term loan.
• Debt Structure: In November 2025, the company entered a $17.5 million term loan facility with Avenue Capital, repaying its previous Silicon Valley Bank facility. This introduced new interest expenses and derivative liabilities.

Guidance, Outlook, and Risks

• Strategic Pivot: Management plans to pivot away from reliance on direct-to-patient advertising toward recurring revenue sources, specifically the MyoConnect referral program and growth in the O&P channel (U.S. and Germany).
• Liquidity: The company holds approximately $13.45 million in cash and short-term investments. Management believes this is sufficient to fund operations for at least the next 12 months. The Avenue Capital loan includes covenants requiring a minimum cash balance of $2.5 million and limits on cash burn.
• China Joint Venture: The company terminated its joint venture in China in July 2026 after its partner, Ryzur Medical, filed for bankruptcy. No financial impact was recorded for the period ended June 30, 2026.
• Key Risks:
  • Dependence on third-party payer reimbursement (Medicare Part B represented 51% of revenue for the six months ended June 30, 2026).
  • Ability to scale operations to achieve positive cash flow.
  • Compliance with debt covenants under the Avenue Capital facility.
  • Supply chain disruptions affecting custom device fabrication.

Investor Verification Checklist

• Reimbursement Rates: Verify the stability of Medicare Part B reimbursement rates and the impact of the January 2026 fee updates on future margins.
• Derivative Liability Volatility: Monitor the fair value of the warrant and compound derivative liabilities, as fluctuations in stock price and volatility significantly impact reported net loss.
• Debt Covenants: Confirm ongoing compliance with the Avenue Capital loan covenants, specifically the minimum cash balance and trailing revenue/burn rate requirements.
• Channel Mix: Track the shift in revenue mix from direct-to-patient advertising to the MyoConnect referral program and O&P channels to assess the success of the strategic pivot.
• Cash Burn: Review the trend in operating cash flow to ensure the company remains on track to extend its runway beyond the 12-month horizon stated by management.