Myomo, Inc. (MYO) is a wearable medical-robotics company that designs Myoelectric Orthotics for people with Neuromuscular Disorders in the US, China and Germany.
On July 8, Myomo announced record preliminary Q2 Revenues of $7.2-7.4M (+92-97% YoY) blowing away the Consensus Estimates of $5.2M by 37%. MYO also logged a record-high 210 MyoPro Authorization & Orders and record Pipeline Additions of 550. Management’s comments were very bullish indeed:
According to the CDC, there are approximately 6M Stroke Survivors in the US, with 800k patients suffering a stroke every year. At a conservative price of $50k/per MyoPro, every 20k patients equal a $1B Revenue Opportunity.
MYO estimates that there are up to 600k Medicare-Age Patients who are fully medically-qualified for a MyoPro and up to 50k/yr replenish this prevalence population. As of April 1, 2024, 50% of ALL of these patients (Medicare Part B) became fully-covered for a MyoPro. For the other half (Managed Medicare), Medicare HMOs are now legally obligated to cover the MyoPro.
In response to MYO’s prelim guide, Lake Street also published a good piece explaining why this year’s numbers are TOO LOW and why we will see GUIDANCE RAISED.
We agree wholeheartedly. Please take a look:
Did we miss the first part of the move? YES. But what we gained is the confidence that the MYO Story is now de-risked at these levels.
MYO is not a cheap stock. Instead, we view it as still very-attractive based on what we anticipate for the company, next year, in 2025.
As is the case with our best inflections, we believe a big dispersion currently exists between what Myomo will do in 2025 Revenue vs the Consensus Estimates. We believe $50M in Revenue is achievable versus the Consensus of $39.11M.
A BIG difference:
As for why we think Myomo does $50M in FY25, it is the big opportunity ahead of them. With the addition of Medicare Part B Patients, the company asserts its TAM has approximately DOUBLED. Remember, J-curve adoptions occur in Med-Tech when reimbursement finally flows.
As of April 1 of this year, the reimbursements truly began flowing:
As Management attested on the Q1 Call in May:
Myomo has already guided to $100M in Revenue in 5 years. We think they get there by 2027, maybe even 2026. We think there’s even a possibility for $60M in 2025, if all goes right. Keep in mind that they are the only game in town.
Finally, the Orthotics & Prosthetics (O&P) Clinics, are yet another growth lever about to open up for Myomo. The company is already seeing significant levels of interest from O&P, and while it was 4% of Revenue in FY23, MYO expects it to become a “much larger percentage” of the business going forward.
In Q1’24, it was already 7% of the Product Revenue and poised to grow as MYO re-engages with the O&P Channel, now that Medicare Reimbursement has been finalized. The combination of Medicare AND the anticipated uptick in O&P set MYO up nicely for two significant years of growth in 2025 and 2026.
A year from now, we think MYO’s multiple expands to 7x 2026 Revenue of $75M. This would get the stock to $13 in 12-18 months, based off the current ~38M fully-diluted shares outstanding, and another 2M shares during a potential raise.
Myomo could end up spending too much money on marketing, negatively affecting margins and thus preventing the company from achieving Cash Flow Positive as predicted for Q4.
Another risk includes the potential for a capital raise, as we cited just above. In fact, we DO think a raise is coming but not until after either Q2 or Q3. We would therefore leave some firepower aside for such an event. We believe it happens as the stock goes up to $6.
We plan to buy any/all dips down to the upward trending 10day SMA and round out our position on any high-volume move through the $5.40-$5.60 Resistance Level.
STOP LOSS: 50-day SMA (~$3.60).
As you establish your position in MYO, we want to allow for the psychological difficulty in buying a stock that was almost 50% cheaper a few weeks ago. Buying an extended name is never easy. Yet, consider our deep-dive of WGS on April 30. GeneDx Holdings was up considerably, when we began scaling in. However, the company’s massive inflection had de-risked the stock, making it a better buy, albeit at its higher level.
Now consider all this as you take look at MYO’s chart, from a longer-term Risk/Reward perspective.
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Disclosure: We are long MYO stock & calls. We may change our positioning at a moment’s notice, without notifying you of any such moves.
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