Myomo, Inc. (MYO) Earnings Call Transcript & Summary

All right. Good morning, everyone, and welcome to Myomo's Investor and Analyst Day event. I'm Tirth Patel with Alliance Advisors IR. We're delighted to have you join us today in person and via the webcast, and we have a lot to share with you over the next few hours. We'll spend a lot of the morning going into the direct provider business, lead gen, field ops, reimbursement, post-delivery support. And then we'll go for the manufacturing tour and after which, we'll have lunch served. And we'll spend the afternoon discussing international business, the O&P channel, product development, finance, and we'll wrap up with a Q&A. But before we begin, I'd like to caution that statements made during today's event by management other than historical facts are forward-looking statements that are covered by the safe harbor provision of federal securities laws. These forward-looking statements are not guarantees of future performance and may involve and are subject to risks, uncertainties and other factors that may affect Myomo's business, financial condition and operating results. These risks, uncertainties and other factors are discussed in Myomo's filings with the Securities and Exchange Commission. Actual outcomes and results may differ materially from what's expressed in or implied by these forward-looking statements. Furthermore, 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 event, June 18, 2025. It's now my pleasure to turn the podium over to Myomo's Chairman and Chief Executive Officer, Paul Gudonis.

Well, thank you, Tirth, and thank you, everyone, for attending here in person to our first ever Investor and Analyst Day and for all those of you that are watching online. So just a little bit of background on myself, and I also asked all of our senior executives who you'll meet today to give you a little bio themselves. I've got 40 years of plus experience in bringing new technologies to market from the first cell phone network in the country that was spun out of AT&T, a couple of smaller enterprise software companies. One was acquired by EDS and then took and built that into a $0.25 billion business in 20 countries around the world. Then when the Internet was being commercialized in the mid-90s, I joined the company, BBN, that really did invent the Internet. We took a little $5 million regional network and turn that into a $1 billion global supplier of Internet services, about 5,000 staff. I ran with inventor Dean Kamen, the global robotics competition with 0.25 million students, 100,000 volunteers, corporate sponsors like NASA, Google, Medtronic, Boston Scientific, IBM and others. And then through that, I met the team from MIT that had this really big idea to conquer paralysis, a big unmet need, some key patents from MIT, but they really needed a CEO to come in and commercialize it. So I joined the company initially as an investor. I figured out, okay, how do we build the team here to get the right product market fit, totally redesigning the product, targeting all these individuals with paralysis, raised capital, and you can see today is the team that we've got here at Myomo as well as this new facility to continue to expand the business. I've got an MBA from Harvard Business School, got my engineering degree at Northwestern University, where I serve on the Dean's Advisory Board for the Engineering School, the Biomedical Engineering Council. I've been an adviser to the Northwestern Medical Device Development course and also for Design for America. So what we want to accomplish today is I really want to give you a deeper dive into Myomo's operations. You'll meet members of our senior leadership team, to our new headquarters here, especially those of you who might have been at the old Portland Street office. We've got the space now to really grow this company. You'll have a chance to test your EMG signal with one of our MyoPro demo units. We'll provide details regarding our long-term business plan, which is really the focus of today is how we're going to scale this business from where we are today. We won't be updating Q2 or 2025 guidance today because we're really focused on how we're going to build the business and your questions on that. And then also one of my goals is to listen to you and learn from our guests today. So over the last several years, the strategic context here is we are so well positioned in this marketplace. We've created a new product category with the MyoPro of Myo [indiscernible] orthosis -- we have the first-mover advantage in meeting a large unmet need of people with chronic arm paralysis and one that grows every year. Last year, we finally received CMS reimbursement, which opens up the market to all the Medicare age population here in the U.S. We established a direct provider business, which Mike Mitchell, our Chief Commercial Officer, will present to you today to basically bring this product directly to the patients. And now we're developing the new orthotics and prosthetics clinical channel. And we've got an attractive margin profile, 70% gross margins and opportunities to improve that with scale. Our go-to-market model in our channels, and if you look at just Q1 results here, our direct billing channel with our own certified process orthotists, our own reimbursement operations, 79% of our revenue in Q1. The VA, about 3%, and we serve many veterans across the country with the VA medical centers. Our international business, which you'll hear from John Frijters, who heads up international from Germany today. It was about 13% of revenue, and that growth year after year. And there, they sell through in-country orthotics and prosthetics clinics that are in network with these insurance companies are licensed in Germany. And then with the U.S. O&P clinics, just 5% of our revenue in the first quarter, but we see that as an important increasing part of our business going forward here. And the next big milestone, and I've talked to some of you about this, is we've been growing the company now 10 years of revenue growth year after year. And our aspiration is to get to a $100 million company and do that within the next 3 years by 2028. And so that's what we have set our sights on as a milestone to pass through and keep going from there. But you're going to hear our plans about how do we get to that position here in the next several years. The team of people you'll meet today. I report as Chairman and CEO to the Board of Directors. Our commercial operations team is headed up by Micah Mitchell. And then we've got marketing, Joe Chicoskie. Field operations is headed up by Peter Young. Unfortunately, Peter had a family medical issue to deal with today. So Peter isn't here with us today, but Micah will fill in for him. And then Kathy Sawyers heads up our clinical services team. Then we've got medical affairs, Dr. Harry Coleman, heads up that operation, which is really around our research as well as all of our reimbursement operations. Our Engineering and Product Strategy Head is Malcolm Bach, our manufacturing operations, and you'll get a tour from Colin personally this afternoon. So Colin heads up manufacturing, John Frijters International; and then our CFO is Dave Henry. So with that, let me turn it over to Mike. And then, of course, we'll be looking for your questions all along the day and then a more extensive Q&A session at the end of the day. So thanks again. And Mike, it's all yours.

Thank you. Okay. Thanks, Paul, and thanks to all of you for being here, those that are in here in person as well as those that are streaming the event. So my name is Micah Mitchell. I'm the Chief Commercial Officer. I've been with Myomo for about 8 years. And a little about me -- there we go. Okay. A little bit about me. So I've spent my whole career working in home medical equipment space. Some small companies and medium companies that were rapidly growing, some large companies as well have worked on the provider side, where we're helping the patient individually as well as on the manufacturing side. And interestingly enough, Myomo is not only stop for a company that has done both. I'll kind of rewind 30 years. My Capstone economics project at Baylor University. We were trying to determine if there was a correlation between the time spent in inpatient rehab and long-term health for those that had spinal cord injuries. I personally talked to several hundred patients who had spinal cord injuries, where they took me through their journey from what their life looked like before the injury, what it looked like right after the injury and then what it looked like long term. And I immediately learned that I wanted to dedicate my career to helping disabled people. Many things have changed in the past 30 years. So for example, back then, patients would have inpatient rehab for months, 2, 3 months inpatient to learn how to live with your disability. Unfortunately, today, for a lot of reasons, that's measured in weeks and sometimes even days. Shortly after finishing undergrad, I got straight into the home medical equipment. I personally went into thousands of patients' homes to learn how they survive being physically disabled. And our whole job all along the way has been to come up with assisted technology, devices and products to help them do more with the physical limitations that they were facing. So how to get from point A to point B, how to get in and out of bed, how to breathe easier in your own home, how to adjust yourself and bed. All of these assistive devices have always been designed to accept someone's ability that day and to give them devices to help them improve. I never would have believed back then had somebody told me that soon there will be a product that helps people move more than they're able to at the time. And here we are today with the MyoPro, which you'll learn much more about later today that helps someone with a paralyzed arm to immediately move the arm and grasp things and gain movement. What we're doing to me is meaningful. It's exciting. I think you guys will appreciate the business that you will learn about today, but I hope you also appreciate the humans that we are helping each day to improve their quality of life. So I'm going to briefly right now take you through the patient journey. So about 80% of our revenue is the direct billing business. So we're going to spend about an hour talking about that. So right now, I'll kind of briefly take you through the journey. Then we'll have other leaders come up and get into some of the more specific details of each step of the way. As you can see, we kind of think about it starting with lead gen. And that's not only sort of getting leads, it's also educating the community and getting awareness among patients, therapists, physicians as well. But it all starts with that -- our marketing efforts to generate some demand. Then we have to do some things to make sure that clinically, they're a good patient and to get funding in place. It's an expensive product. And so there is a health insurance component, and you'll learn quite a bit about that as well. It's a custom fabricated device. We don't stock these things in the field and take them off and put them on. So there's quite a bit of work required to make this perfectly fit each patient's arm, the distance from the pivot on the elbow to the hand, every hand is different. And we'll kind of take you through the fulfillment process, and you'll get a sneak peek of how we do it here. Once we deliver the product, many home medical equipment, orthotics and prosthetics, it's -- you can deliver the product and not a lot of training is involved. Our product is different. If you haven't moved your arm in a while, there's a process to learn how to move the arm again. It requires therapy and post-delivery protocols, and you'll hear a little bit more about that as well. So briefly on the lead gen, we're educating through a few different methods. We lean heavily on TV advertisement, social media because they work very well for our demographic. What we've learned is not only are we reaching out to and educating patients, we're also educating family members, others in the circle of care, such as physicians and therapists as well. Once we've kind of generated the awareness and interest and have someone to talk to, they go into the intake and telehealth screening. Intake is really the first time we talk to someone on the phone. And a lot of times, folks have done quite a bit of research. Other times, they've done no research. So the phone calls can vary. Once we sort of check that first phone call box, then the next step for efficiency and a lot of reasons is the telehealth screening, not a lot different than a Zoom call. We use a platform where the patient is able to see a clinician face-to-face through a video call to make sure that we're all moving in the right direction. A few of the metrics that we published. So one is obviously pipeline adds. Once a patient has completed a telehealth screening with the clinician so that we validated that they are a clinical candidate and that they have a payer that might pay for the device, it graduates from the telehealth screening to the next stage, and that's a pipeline add, which is one of the metrics that we publish. At that point, we need to get funding in place and make sure the physician understands the product and wants their patient to have it and then orders the project -- orders the product. While we are doing these things, the patient sits in the pipeline. Once we have funding in place and a physician's order in place, and it's ready for us to move forward into the fulfillment, that's when it exits the pipeline and enters the backlog. Where it sits in the backlog where we do the heavy clinical lifting, fabricating the product, finding therapists, training therapists, delivering. And then usually at delivery is where the patient exits the backlog and turns into revenue. So kind of high level and just a brief reminder, generate demand, talk to the patient, do sometimes a telehealth screening, sometimes in-home eval during that telehealth screening middle phase. Once we have confirmed they're a good clinical candidate and they have an insurance that might cover the product, they enter the pipeline. And while we're trying to get funding in place and talking to their physicians, they're sitting in the pipeline. Once funding is in place, they exit the pipeline and enter the backlog where they sit until we deliver the product. And again, in most cases, revenue is recognized at the time of delivery. So as we get into a little more detail, I'd like to bring Joe Chicoskie, our Director of Marketing up, who will take us through the marketing lead gen aspect.

Good morning. My name is Joe Chicoskie. I'm the Director of Marketing here at Myomo. Originally from Pittsburgh, PA. Currently, I live in Dallas, Texas. So DieHard Black & Gold live behind enemy lines. So I started my career at the JCPenney corporate office in Plano, Texas. Great opportunity. A few years later, I went across the street to EDS. There we go. Sorry about that. One across EDS also across the street of Plano, Texas, great experience right out of the gate, 2 world-class corporate organizations. From there, I went on to Virtus Communications, which is a $1.2 billion marketing communication company. JCPenney was a client of Virtus. That's how I got over there. 5 years prior to coming to Myomo, I was working for a boutique agency in Dallas, and I was focused on my clients direct to consumer for a medical device. So when I saw this opportunity, it was a really good fit. And why I've been here at Myomo, we were working to refine our marketing efforts. And I'm responsible for lead gen, and I'm focused on getting the cost per pipeline acquisition down. Here's looking at -- we primarily get leads from 3 sources. The first one is TV. Next one is digital advertising and social media. And then the third is clinical referrals and organic. With our TV advertising, we do utilize an agency for consulting, for ad placement and for pricing. Additionally, as part of the Q1 Meta situation, we have also partnered with a digital agency that has proven to be effective. With TV, we track our performance using about 50 TFN toll-free numbers with each station. With TV, we have a call center in Fort Worth, Texas. If somebody calls during the day, they could talk to the CXD team. If we have availability in the telehealth, we call a walk-in and they can go right in. With digital advertising and social media, we get instant results on a daily basis, and we're looking at the campaigns in real time. TV is good because it makes the phone rings, and we have an excellent call center. With social, a lot of leads come in, in the evening, patients are at 10 a.m., seeing our ad on TV. They go to our website, they fill out the form, and then those are outbound calls made by our call center during the day. And then for clinical referrals, which are increasing, we tend to get better clinical patients, particularly if the referring source is knowledgeable and has been trained by Kathy's RCS team. We are constantly working to increase referrals. It's a priority for the company. And then lastly, organic. You guys may be familiar with EIOPA coming up in September. We're really excited about having 2 speaking opportunities this year there. We're going to be at the PM&R later this year. So we're active engaging the O&P community. Also, we are at AOTA in Philadelphia, engaging therapists, OTs and PTs. And then we're also looking into local events. All right. The next 2 slides, we're just going to look at quickly some Facebook creative. Patients, users appreciate a brand that appears dynamic and relevant. This is the MyoPro 2X. So this is all new photography that we've recently taken. So fresh campaigns applies active and engaging. We're also doing a lot of attention-grabbing videos, which have been highly effective. And we're also using AI to scale. So I go to the next slide, you could see we have very different ad copy, very different images. Each morning, I could see which got the most clicks, which is -- needs to be optimized. And we can also see ad fatigue in real time. So if the cost per lead is increasing, increasing, increasing, we'll switch the creative out. Here's taking a look at advertising spend and advertising spend is pretty much digital, primarily Facebook and on TV. And we're looking at this on a weekly basis. For example, with TV, we can test multiple stations. And then on the digital side, we have Instagram, we have Facebook. So we're determining our specific strategy on the creative and placement on a weekly basis. For example, you could see on this slide, we did have a hiccup, I would call it, with Meta in Q1. And you could see in April, so you could see in Q1 that we really spent more on TV, which historically, we spend more on digital advertising. In April, we brought on an ad agency earlier in the year. We rebounded in April. And you could see cost per lead coming up next. Our cost per lead is better than it has been in 2024 in April, and this is increasing our budget, drastically increasing our budget. So we're really in a good position, and I get the question all the time, is there a saturation point for our digital advertising and direct-to-consumer for stroke patients. And based upon this data, we're not experiencing saturation at this time.

Okay. Now I'll kind of talk about our advertising cost per pipeline ad, and I'll even kind of go back to the previous slide. We're spending much more -- spent so much more on advertising in April than we did in any quarter in 2024. And as you spend more, even when you're well below a saturation point, you still can -- when you have rapid increases in your spend, you can see some increases in your cost per lead even when you're below a saturation point. Part of that is timing with social media spend and TV spend and whatnot. What we're experiencing is our cost per lead in April, even with a more significant spend with leads 2.5-plus times what we were getting sort of in just a few months before, not only is our cost per lead not rising, but it's getting better. So I would kind of say, if there is a saturation point for advertising, we're nowhere near it at this point. That's it. So advertising cost per python ad, which is a metric that we publish is a function of 2 things, our cost per lead and our lead conversion. Each of those are a function of some other things. So when I think about cost per lead is there competition. So for example, at the end of the year, Medicare Advantage plans tend to advertise in the same space that we're advertising, which on the good news is that, that kind of confirms that we are advertising in the right places. Also end of year, we're competing with other advertisers for sort of end of year holiday shopping and those things. So we -- competition is a factor, and we try to account for that when we're planning our spend throughout the year. Also, it's performance and it's how well are our teams doing converting those things. So when I think about lead conversion, some of the things that we're doing today, so for example, the telehealth screening was a good guy for us because it became much more efficient. We could take a patient from the phone directly into a telehealth screening, and that was a good guide for our ratios. Some of these sort of factors we control, some we don't control. But we do the best that we can to control all of those things, and then that kind of leads to an advertising cost per pipeline ad, which, as you guys know, we do publish. The patient decision-making process is not always straightforward, probably similar to many of us when we have a significant purchase. Sometimes you sort of go through the process quickly. And other times, it can take a lot of time. You begin to get interested in something, you begin to seek information. In our case, sometimes it's a patient may be seeking information from family friends, from therapists, from physician, from the Internet. So sometimes they want to go through that process. Also with our patient population, things happen. There -- it's not straightforward for a disabled person or someone with Hemopoiesis to get out of bed. They're generally not going to work to make their lunch to kind of get through the day. There are other comorbidities and health issues. So we do see a lot of those things sort of pause the patient's journey where they need to take a break, focus on other things and/or learn about the product only to come back and reengage with us later. So there's sort of a cycle time aspect of our pipeline adds as well from generating leads to getting them into the pipeline to navigating the process. Of that time line, some things we control, some things we partially control and there are other things that we don't control. What I want to demonstrate here is kind of how long that actually takes. So what we've known or what I'll share is of the pipeline adds each month, so the patients who pass the clinical telehealth screening, generally, about half of those pipeline adds are from sort of new leads that we got within the last month and about half of those pipeline adds were older leads. So patients who engaged with us needed to pause and take some time and figure some things out and then came back to us. You can see we're very strong in the first week. So we -- generally, when a lead comes in, they're contacted immediately. And so we have a pretty good surge those first 2 days from the lead date until the date that they become a pipeline ad. Then due to our messaging, we have plenty of success sort of that first 10 days, and then we see a dropoff where patients need time, they want to be put on hold, they're thinking, they're talking through the circle of care. And then we reactivate leads through direct campaigns and a lot of different efforts. And then in some cases, separate from our efforts, patients just come back to us. So some patients are ready to move immediately. Other patients need time, which is not really measured in weeks. It's in years from the time that they first engage with us until they're ready to proceed with the process. So marketing efficiency, there's some good news in here and some old news in here as well. But -- so our cost per lead is the orange bar. And obviously, January, February, we had a hiccup there where the cost per lead increased on us for a short period of time. That was due to some meta changes. We have that situated, so that's way behind us. And the April cost per lead is as good, if not slightly better than what we were experiencing a year ago. The white line is sort of our ad spend per pipeline ad. These are 2 different axes, by the way. And clearly, as we were spending more for leads, our advertising cost per pipeline ad increased through Q1, and we're beginning to see that decrease. That said, due to the long cycle times, if we're getting 2.5, 3x more leads today than we were getting Q4 and months at the beginning of the year, we would expect our cost per lead to decrease at a more rapid rate than our cost per pipeline add because so many of our leads are new. Many of these new leads will convert to pipeline adds in a short period of time. Other of these new leads, of which we're getting many more than we did in the past, will need time to mature. Okay. So now I'm going to go into field operations and dig into a little bit more. So Peter Young is our Senior Director of Field Operations. He has 20 years of experience in home medical equipment. He's been a great addition to the team, and he has 3 departments sort of that he handles that take us from the intake to the telehealth screening and then all the clinical work that our CPOs do. So the intake -- we have an intake center in Fort Worth, Texas. It's about a 20-seat call center. We really do more than your typical call center, but it's a wonderful team that we've grown from, I guess, 2 or 3 folks 7 years ago up to about 20 today. When I first joined the company, I was actually living in Ohio, and Paul and I began talking about sort of what the future of the company may look like. And we really knew that we would need a strong, robust call center. Well, as it turns out, Cambridge, which is where we were based at the time and Boston are not ideal locations for a rapidly growing call center, partly just due to the cost of labor. So we went through a process many similar companies go through to determine what is the best place for a call center that could grow to 100 beds in a short period of time. And there's a handful of locations. So Cleveland, Ohio is a popular spot. Nashville was more popular, I think, than it is today. And then you have a couple of cities in Texas, kind of Austin and the Dallas-Fort Worth area. So we chose the Dallas-Fort Worth area. We've really zoned in on the profile of the intake coordinators. We would love to have some home medical equipment experience, maybe some insurance experience, doctor's office experience. But what we've learned is even more important than that is someone who's a good listener, who they want to help and talk to disabled people. And sometimes even the conversations can take some time with slight cognitive deficits, with speech issues. And so we want a good team of intake coordinators that are patient, kind and caring, but also smart enough to do the job and handle the sort of unique complexities that we have that not all call centers do have. We are able to -- with this particular department and where it is, we're able to rapidly scale it up and down, which is a huge benefit to us. Today, we handle about 25,000 inbound outbound phone calls with this team. And when we think about the phone calls, there's inbound and outbound. So one great thing about a TV ad, a lot of patients will see a TV ad, go do some research, fill out a form. If a form is filled out, then we are an outbound call center, trying to call the phone number to get the patient on the phone. On the other hand, if it's a TV ad and our phone number is on the screen and they call us directly, we love those because it's an inbound call. We say, hello, the patient on the other end is already mentally ready to have the conversation. With an outbound call, we don't know what we're catching them doing. Are they trying to get out of bed? Are they about to go to the bathroom. So we have to help the patient mentally get into the state for the conversation that we're about to have. So we are always looking at incoming and outgoing calls and our success rates on those as well. So once we've talked to the patient and we've clarified that they have a paralyzed arm and that they have an insurance that might cover the product, then we flip them to the next clinical screening stage. We began to central -- we began testing centralizing telehealth screenings about a year ago. So before we centralized telehealth screenings, our CPOs who are the licensed clinicians out in the field that I'll elaborate on in a minute, where they would travel, they would go to a patient's home, they may go to a therapy clinic, they may go do a shape capture and then maybe they're home a day or so a week. And when they're home, they would go into our waiting room and handle prescheduled telehealth screenings. Well, we wanted to be more efficient as a company. That's -- it's one of our -- the CPOs are a unique resource and a limited resource for us and an expensive resource for us. So we thought, can we centralize this function so that our field CTOs can do more patient contact product things for which they're trained to do. And can we also allow them to not have to worry about going into this waiting room with a side benefit for the patient. And the side benefit is the patient doesn't have to schedule the appointment. They would have that option. But if they want to have their telehealth screening now, they could immediately hop into the waiting room. So we tested this about a year ago. It was successful. And so we built a team. We have a handful of patient eligibility specialists. These are also clinicians, but they're like a physical therapist assistant or a code to occupational therapy assistant. So they understand how a stroke patient presents. They've been trained on our product so that through a telehealth screening, they can quickly determine green light, yellow light, red light. And the yellow light band is fairly narrow. So some patients clinically cannot use our product. Some can, and we'll talk about more ratios as we go along. But we've learned just to be more efficient, let's do that through a quick telehealth screening. And then to even be more efficient, let's centralize the telehealth screenings so that any time someone wants to come into the waiting room, they can immediately hop in and one of our clinicians is there to see them on demand. So I'll kind of rewind one step to our intake coordinators in the call center. Now as they're talking to patients, again, they don't have to schedule you for next Monday or Tuesday. If the patient is ready, willing and able, they send them a link and they hop right into the waiting room immediately. And we'll see a brief telehealth screening here shortly. So we are always trying to make sure we have the right number of people doing the right things at the right time. And so we're kind of managing the process flow all the way through. So among other metrics, we want to make sure that the telehealth screens that are completed sort of match the increase in leads. So the gray bar here is kind of the increase in leads. You see the term workable leads. So for example, there are some insurances that don't cover the MyoPro yet, like state Medicaid plans and things like that. That's not a workable lead for us, okay? So of the leads that have a chance to get a MyoPro, that's sort of a workable lead. And as the telehealth screens are completed, you can see we're generally following the same path. So that's good news. You can probably visually also tell that the percent of telehealth screens completed, so the blue bar that are good, which is the orange bar, which are pipeline adds, the percent is that are good has decreased over time. And what we found is as our clinicians get more experience and know better clinically and better outcomes, as we've narrowed the yellow band, we've generally narrowed it to more or sort of red light than green light because we want to maximize clinical outcomes. Today, when we complete the telehealth screening with a patient with a paralyzed arm with an insurance that might cover the MyoPro, about 40% of the time, we move to the next step, and that's a pipeline add. And about 60% of the time, it's either -- sometimes it's not yet if they have some clinical conditions that they can work on through therapy. And sometimes it's -- sometimes they're overqualified and sometimes it's just not going to work for them. Okay. So kind of a few of our hold reasons. The most common -- there's kind of 2 big buckets of why patients don't get the product. One is they're too bad off clinically. So we have tone and spasticity, which tend to get worse over time with a stroke patient. Those are kind of the primary reasons someone won't get it due to tone, which Kathy will speak to in a little bit. The other reason is some patients are overqualified. So you do have some patients who just have a deficit in the hand, but not in the elbow and a hand-only device might benefit them, kind of tricky. And then we have some patients who can move better than they think they can, and our product would not help them do more activities of daily living. So of the 60% of the time that we say no, most of the time, it's either they're clinically too bad or clinically too good. Okay. And then this is a telehealth screening.

Okay. I think we're ready. So -- so I'm Megan with Myomo. I'm going to ask you some questions, get some medical history from you, take a look at your arm, kind of see what you can do with it. And based on that, we'll determine if we think the MyoPro will be a good fit for you, okay? Okay. All right. And just to confirm, your James...

Yes, ma'am.

Perfect. Okay. So tell me what's going on with your arm. What happened?

Christmas Eve, I had a stroke, ended up with a sublication in my left arm. And last I heard it was still at one finger. And I want to find out if this machine will help me.

Yes. And was that Christmas Eve of this past year of '24?

Yes, ma'am.

Okay. Any pain in that left arm?

Only if I lift it above a certain point.

Okay. So when you lift it up high. And when you do lift it up kind of high, how high does the pain get on a scale of 1 to 10?

7.

Okay. But no pain otherwise.

No, no.

Okay. And then what's your dominant side, the right or the left?

Right.

Right side. Okay all right. So we're going to do some stretches just to see how flexible that arm is. So you can use the right to help you. We're going to kind of start at the shoulder and work our way down. So let's put both hands together and let's start with a nice big shoulder stretch. So let's pull that left arm up about to there. We don't want to go too high if we've got a subluxation. Any pain when you go that high?

It hurts a little bit.

Okay. Let's go back down. And then what about pulling your arm out to the side? Like you're trying to show me your arm pit. Can you lift it up? Good. Any pain there?

Not much.

Good. All right. You can relax. Let's move down to the elbow. Go ahead and grab on to that left wrist and I want you to reach towards the camera. And then get that elbow straight as you can. Great. Good. And then can you bring your hand to mouth? Very good. Let's move down to the wrist in hand. Can you pull your fingers open and give that wrist a good stretch Good. And then can you push your wrist down? Very good. And then what about your thumb? Can you pull your thumb away from the palm of your hand.

Actually move my thumb a little bit.

Okay. And then can we move the camera down just a little bit so I can see that thumb. Okay. So pull the thumb away. Very good.

Okay. So it's interesting. We began testing telehealth screenings in Q4 of 2019, kind of tested it began to work. And so we sort of began to roll it out to all of our CPOs at the time. And again, we weren't centralizing it. And there were some technological challenges that our patients mostly faced because they don't work on Zoom all day like the rest of us. When COVID happened, that really helped us with the technical issues because patients were doing telehealth with a whole lot of health care providers. And so that was definitely a good guide for us. About 85% of our digital leads come in through a smartphone. And so it appears with this person, they actually used a smartphone. So it's in their hand, they talk to us, intake coordinator. We do get some on laptops and other things, but then they're able to on the same phone, click it. In this case, he had a family member helping him with the phone, which is always helpful. Okay. So once we're through the telehealth screening and they're in the pipeline, then we need to get funding in place for the backlog. So Dr. [indiscernible] will speak to that in a minute. But then once we have it off and it's time to -- for our certified prosthetist orthotist to do their work, we call that kind of the fulfillment stages for us. Today, I think there's 13 on the screen. We have 14 full-time CPOs. So obviously, with health care, everything is regulated. For a custom fabricated orthosis, for the most part, you need to be a certified orthotist CO, certified prosthetist CP or certified prosthetist orthotist CPO. And this kind of depends on what you get is what you thought you wanted to do when you went to grad school. So it's 2 years of graduate school, followed by sort of a year-ish of internship and then an exam and then you become certified. And then, of course, every year, a certain number of continuing education units to maintain your certification. And the way I think about it at the CPOs is they're almost a therapist and they're almost an engineer, and they're really good with their hands. What I've also found working in the space is that -- and we'll just kind of lump CP CP,CO,CPO, we just kind of call them all CPOs. But what I found in my opinion is that the CPOs care more about their patients than anyone else I've been around in health care, more so than physicians. They really care about helping their patient and improving the quality of life. And working for us is unique because our patients are able to focus on one product that's cool and exciting and they get to travel and see a whole lot of different patients. A typical CPO job is you drive to a clinic or office, you're there from 8 to 5. You have a few referral sources built in, physicians that are doing amputations or refer for braces and orthotics. Patients come to you, you do your work, the patients go home. So the CPOs that work for us, it's a little bit different. They're home base. They travel a lot as we cover the country with 14 of them. As we're growing, we believe a lot of efficiency gains and interesting things will happen when we get to 30 CPOs and particularly when we get to 40. 40 is kind of a magic number with sales territories where you're kind of done with airplanes and hotels, which helps with the expenses, but it also allows the CPOs to see more patients and be more efficient and sort of increase their sort of annual revenue number per clinician. The fulfillment process, so once we have an auth and we know this patient funding is in place and this patient is going to get a MyoPro. For us, that's a heck of a lot of work to get to this -- in most cases, with a lot of health care. So if my son, for example, has happened, we thought he broke his arm. We called the pediatrician who has an x-ray machine there. And he said, "Come on in, I'll do an exam. He immediately behind the scenes went to our insurance and received a prior auth for an x-ray. Now he couldn't do the x-ray unless he did a physical exam first, but the prior auth was sort of automatic because an x-ray for a broken arm is standard of care. We do a heck of a lot of work to get to that point because we're not quite standard of care yet. But once that -- once we show up at the doctor's office, that's kind of the fulfillment stage. He's going to do his physical exam, do an x-ray and treat the patient. That's where we finally get into this fulfillment stage. We get to do the heavy clinical lifting that everyone wants to happen. That starts with getting a perfect shape capture of the arm. Similar during COVID, we felt that it would be much more efficient to have a sort of a digital shape capture kit where, if needed, we can do it remotely. So this kit can be mailed to a patient where they can get help maybe from their therapist or a family. In the kit, as you open it up, you can see the kit on the left side, there's a screen where we can pipe in with the telehealth right there, help them take pictures, help them place things on the arm, so we get that perfect shape of their arm. Once we have the perfect shape of the arm, that's where the magic happens over here, which we're going to walk through later, where we fabricate that custom device to specifically fit the patient's measurements. I will say upper arm and lower arm, all fairly similar, but the pivot from the elbow to the wrist within a millimeter, the shape of each hand is so different, and we have to get it just perfect, and it takes time to get those measurements. And then it takes time to build the product. And then after the product has been fabricated, we show up for the delivery. Occasionally, a delivery can take an hour. More common is a 3-hour delivery, which is a lot of time to be face-to-face with the patient, doing the tweaking on the product, doing the initial training. And then after the delivery is where additional heavy lifting from a clinical standpoint takes place, which Kathy will speak to that later as well. So I talked a little bit about territory management. creamy sales territories is not unique to us. It's a little more complicated on our end because not only are we looking at where do the stroke patients live, where are our leads coming from, but there is a state licensure aspect as well that each state can do their own way. Most states have it, some states do not. And so when we hire a clinician, we need to make sure that they are licensed in the state or states that make sense for Myomo. In addition, CPOs are a limited resource. And as the O&P industry grows, we're all competing for the limited resources. And we believe as we grow and kind of get to that magic 30 number and then up to 40, we will see significant efficiency gains for our clinicians in the field. Okay. So we want to pause for Q&A, Dave? Okay. So before I pass over to Dr. [indiscernible] , we've kind of gone through the way that we sort of generate awareness and interest in our lead generation and marketing, kind of a little bit of the process flow. So we'll open it up for any questions about that part.

Scott Henry with Alliance Global Partners. There was a lot of talk about cost per lead and how that's changing. How do you measure quality of the lead? I mean we can add more patients to the top of the funnel, but we want to make sure they're equally as strong of candidates as the one before. How does one measure that?

So great question. we look at every metric that we can. So for example, a patient with Medicare is a much higher quality lead than a patient that has a state Medicaid plan that won't cover the product. So for things such as payer, even geography, we can think about quality of lead. We've been asked a lot about clinical quality of lead. Is there a way or can we determine if there's a difference in the clinical quality of lead? Our belief is that we cannot. So if someone is contacting us with a paralyzed arm from a stroke, a certain number of months or years ago, it's hard for -- we don't believe that, that changes over time. So if you give me a bucket of 100 stroke patients that contacted us 6 months ago or a bucket of 100 stroke patients that contacted us today, we believe that because of the way that we advertise and what we know clinically that a clinical quality, those would be the same.

Okay. Okay. Fair enough. And I assume you verify that over time to track it.

We did, yes, yes.

Yes. Perfect. And the second question, I just had a final question. You mentioned cost per lead gets higher during periods of rapid growth. I guess, is there a reason why you can't have the benefits of scale, meaning a lot of times when business goes up, costs go down, -- is it just a trailing?

Yes. I think over long periods of time, we will -- yes, it's a great question. So I'll use TV as an example. When we first began using TV ads, it was local advertising. So we go into certain MSAs and we would advertise that way. We quickly got to where we could handle the country nationwide and had enough CPOs. And when we went from local advertising to national advertising, there was a huge cost per lead gain because we were at scale. And the reason it goes up over short periods of time has to do with our money doesn't get us as far. So if I triple my TV budget next week, I'm not going to get as many ads run per dollar as I would this week. And so like with TV, we're doing sort of a remnant reverse bidding, so -- which really works well for our demographic and the companies that we're competing with were very zoned in. But if I want to triple my budget and clear that money, I have to be a little more aggressive on the amount that I'm willing to spend for that 30-, 60- or 120-second ad. So the ad still performed just as well. I just have to spend a little bit more money for the same airtime if I increase the budget significantly over short periods of time. So it's not really the quality of lead, it's that my advertising dollars don't quite go as far during times of rapid growth. It also seems that some of the social media platforms, Facebook, for example, they're paying attention. And if a company likes what they're getting from Facebook and is rapidly increasing their spend, we believe that Facebook, understandably so, takes advantage of that a little bit and sort of charges us a little bit more per lead. We think we can correct that over long periods of time or with slow growth, but over rapid growth, it's a little bit less efficient.

A little bit of front end loaded.

This is [indiscernible] thank you for hosting us today. Regarding lead generation on Facebook, can you just kind of specify how many different creatives you have on Facebook, i.e., is it one sort of banner ad, video ad that you're showing to everyone? Are there 5 different ones? And what sort of efforts you're making if you, let's say, have a best performing control to constantly be experimenting and trying to find new even better performing creatives?

Sure. Great question. And I'll speak to that at a high level, and I may need Joe to help me. I don't know exactly how many -- you saw a couple of slides of ads. I don't know exactly how many are running today. I know -- let me even back up before I talk about performance and how we measure it. With strokes, we have incidents and prevalence. Incidence is you just had your stroke, you're going through the stroke journey from the beginning. That's the new incidences. And then you have prevalence, right? So your stroke was in the past and you're dealing with life as a stroke patient. Whether your stroke was last week or 10 years ago, other than the few patients who are receiving a MyoPro, your arm is still paralyzed, you could still benefit from our product. So as we think about advertising to get in front of the incidence population, which we do some and we'll do more in the future, it's costly because it doesn't magically happen to go to trade shows and talk to physicians and do lunch and learns and all of those things, there's a cost associated with those things. That said, stroke patients who had the stroke a long time in the past, they begin to do similar things. They watch similar things on TV. Their digital footprint starts to look similar. And frankly, it's not an appealing demographic for most companies. So we're not competing with Apple or GM to get in front of that demographic. So as we focused on the prevalence, that's where we've really gone heavy with the social media and the -- another benefit of social media and TV is we get almost instant results. TV, I'm kind of delayed about a week or so, but I run an ad, I don't know how much money is going to clear this week. But by Friday, I know what cleared and what ads ran. By Friday, I know how many times the phone ring, and we can see exactly how each TV show is performing with TV, and we can tweak it weekly. Facebook digital is the same. Digital, though, our budget, the amount we want to spend, we're more likely to hit that on the target, and then we're able to look at the results in real time as well. I personally review it every week and the agencies are going through all the things you would expect them to go through, okay, the station is performing well. Let's spend more money on this station. This 90-second is outperforming the 120-second ad. Let's focus on the 90-second ad. And with Facebook, kind of the -- what happens behind the scenes is what our agency does, where he's constantly looking at what does that picture like? Is it the blue background or the green background? Is it the new creative or the old creative so that we're looking at dollars per views and dollars per clicks. Joe, how many different Facebook ads are we running at any point in time?

Anywhere from 30 to 50, we're looking at this every morning, and we're making real-time adjustments. So like you said, it blue, red, different demographics [indiscernible] and we're making -- we spend a lot of time and energy specifically making adjustments to Facebook to get the best return on our investment. And that's how we also identify ad. If we have 20 campaigns running and 3 of them, the cost per lead is exceeding the 17, and we know we have a little bit of here, we'll change up the copy or change up the imagery.

And just slightly different creative ads, how many of them are rich media, meaning there's video, there's voice and other sorts of things to somehow try to engage with the target audience more effectively versus just something they would.

Yes. So we're going into a lot of short video on Facebook in both Instagram. We're also partnering with YouTube, and we're going to have some more ads on YouTube. So dynamic, engaging, everyone's -- our demographic is not on TikTok, but they do look at their phone, they're engaging with the grandchildren on Facebook, and we are going to go with more video ads. But when it's a static ad, we can make changes more quickly. We don't rely on assets to edit the ad or have a different 15 seconds or 20 or 25 or 30, but we're doing both.

What portion of your advertising spend today is on static ads versus demonstrate the MyoPro.

Yes. I would say on Facebook, 80-20, 80% static, 20% is in video, and we'll gradually see that increase.

And if you're getting -- if you're looking at Facebook and you're seeing some of our ads, the distribution you see should fairly match up with what everyone else is seeing as well.

And I had a few related questions. You mentioned 2.5 to 3x increase in -- is that leads there you a number on that.

Yes. That's correct.

What's the time frame of that.

So when I think about April -- as April as an example, versus January and before, like February and before -- so April, kind of look at it weekly or monthly, even now, 2.5 to 3x as many leads as we were receiving a few months before and 6 months before and 9 months before 2024, we were fairly flat on advertising spend and leads.

Okay. So the April number was 2.5x to 3x on leads versus the 4Q '24 normalized?

Correct, with the lower cost per lead.

Without this Facebook HIPAA issue, right. That's not.

Once we got beyond the issue of April.

Why did you say -- I was a little confused on your -- the comment that Scott asked about. You said ROI -- you're not saturated ROI is good. Why would there be this drop-off in cost per lead then?

Great question. What I'm trying to demonstrate is the hiccup that we experienced in January and February is behind us at this point. So if we did not have a hiccup and everything was steady and then we tripled sort of our spend, you would expect that immediately your cost per lead goes up a little bit because it cost me more to run a TV ad if I increase it really, really sharply. So a little hiccup January, February, recovery in March, April, I kind of compare April to before the hiccup. I'm spending a lot more money and my cost per lead is lower. So that indicates to me that we're not near a saturation point, among other things that indicate that to me. But yes.

Okay. And just to finish the thought, I mean, -- if you -- the adds are supposed to translate to leads and then a pipeline adds, right?

That's correct.

Do you believe you're at least same ROI or better now as compared to what you were before?

Sure. I think over long periods of time, the same cost per lead is going to result in the same revenue due to the patient's personal process, right, where a whole lot of them are ready to act right now and others want to wait. So today, I have a higher percent of new leads because we're spending so much more and getting a lot more leads than I did 6 months ago, right? 6 months ago, my percent of new leads and percent of all leads were remaining kind of steady. And so we kind of saw the pipeline adds. So as I'm getting a whole lot of new leads, the percent of pipeline adds that are new leads would expect to be greater because they have more new leads. The ROI on all the new leads long term, I would expect to be the same. But over short periods of time, the advertising cost per pipeline ad, I would expect to be a little higher because some of these leads will need time to mature.

Okay. That's just a measurement issue.

Correct.

Last question, what is a lead what's the definition of a lead? And what's the conversion to an ad?

So I'll answer the lead part, I may need you to clarify the conversion to an ad. So a lead is someone -- a name and phone number of someone who has a paralyzed arm or a family member or a friend with a paralyzed arm. So if it's a form fill, so online, they fill out the name, phone number, e-mail address, that's a lead. If it's TV, if we say hello and talk to a human, long enough to get a name, then that's a lead.

And what's the [indiscernible].

In time or in ratios?

Ratio.

Yes. So we don't share the specific conversion pieces and constant -- we see nothing short term that can't be explained from sort of rapid increases or decreases in spending or leads.

Chase Knickerbocker, Craig-Hallum. Just kind of to build on that, if we think about kind of post algo change at Facebook and now it's clear the cost per lead has stabilized, even gotten a little bit better. Has there -- is there anything different about the quality of these leads? And I would imagine at this point, you've had a couple of months to kind of see that. Should we think of there being any difference in quality? And is it still kind of that 40% is progressing to pipeline that you kind of shared earlier in the presentation?

Yes. So quality of leads are the same. So for example, of the workable leads, 45% of them have historically been Medicare and are still Medicare, right? And it can be 44%, 46%, but we're not seeing any difference in sort of the quality of leads that we can measure. Now clinical quality, what we are seeing is fewer patients clinically go through our screening. We believe that has to do with our clinicians learning. And the patients learn as well. The product is exciting, and we had a patient come visit with us last week, and she even stated, in spite of everything that you told me and prepared me for, I had a hard time listening because I was viewing getting my full arm back. And if you were a guitar player before your stroke, you are not going to be a guitar player with our product. And even when we say that, they don't always hear it. It was the same for me when I joined the company. I thought everyone with a paralyzed arm, we were going to cure them all and all we would go. And our clinicians are the same. It's exciting. It's fun. And when they first start, they have a hard time saying no to a patient who really wants the product. Over time, they learn as they're doing the follow-up and the deliveries that, gosh, the cognitive ability or they were in a wheelchair and they just ended up not being able to use it as much as we want to or not using it at all. So our clinicians, we believe, with experience become more clinically deliberate. Not significant, but over time, that's the trend that we're seeing.

And...

Sorry, and we don't believe that's a quality of lead. We think that's just a clinician learning our product and being more clinically deliberate.

And that kind of time line from a standpoint of the kind of percentage of patients that convert to the pipeline that do convert to the pipeline, kind of 50% being within 30 days?

So during times of no growth, about half of our pipeline adds are leads from the same month and about half of the pipeline adds are older leads, call them reactivated leads.

And so is it fair for us to think about kind of currently that still remaining true? So here's how the growth has happened.

Great question. So here's how -- we try to explain this. If I were to stop advertising today and spend $0 on advertising for all of July, I would continue to have pipeline ads. They would all be old leads. So then it's not 50-50 anymore. It's very low percent new leads and a very high percent old leads, if I'm not advertising at all. Similarly, if I crank up the volume on advertising, which we recently did and leads increased 2.5%, 3%, then the percent of my pipeline ads that are new leads goes up above 50% a little bit because I have all these new leads to work with. So during times of rapid growth or even steady growth, the 50-50 will change a little bit. If we were to keep advertising spend the same for the next 2 years, then it would revert back to 50-50 pretty soon. Did I answer your question?

Yes. I'm curious, Micah, you had the graph that showed the percent of total workable leads and the pipeline adds, which are decreasing over time as a total percentage. If there's no fewer good leads or, for example, more bad quality leads, what would explain the discrepancy there?

So -- say that again? I'm sorry.

Yes. there's a graph you prior showed that had the percent of total screening leads and what percent of those are pipeline adds, Yes, that would.

Yes. So this is the number of screens that were completed, a telehealth screening in our telehealth waiting room charted against leads. So we're trying to make sure these are generally going in the same direction to make sure that we're getting patients through the phone call and into the telehealth screening. The delta between the orange and the blue, slowly growing over time. So over here, about 60% of patients passed the telehealth screening. Today, about 40% pass the telehealth screening.

And one explanation for that could be that there's lower quality leads coming in, but you just argue that, that's not the case. So what explains why the delta is increasing?

So I don't believe that fewer patients pass the telehealth screening because there's a change in clinical quality. What we believe is that our clinicians get more clinically deliberate or clinically strict as they have more experience with patients using our product, which is appropriate, we believe. And it's probably the same with lots of med device and even surgical interventions and pharmaceuticals as well over time, you are trying to better zone in on who's going to get the appropriate and best clinical outcome.

So putting payers aside on the pipelines, is it fair to assume that you think the percent of pipeline adds that will result in total sales will increase because they are higher quality pipeline adds?

So I think a couple of things could happen. One is fewer patients who get the product are going to use it more minutes or more hours a day and more days a week. So I think that will happen. I think fewer patients will drop out of the backlog because there have been times where we get to the shape capture and we really see the patient and do a full clinical evaluation and learn then that they're not a good candidate. So I would expect both of those things to happen.

Just a clarification on something you just said about patients and even doctors sometimes being overexcited and coming in with the expectation that they're going to maybe get full recovery of their capabilities and reality hitting -- so in terms of making it from a lead to a pipeline add, is that a binary process where it's either will benefit or will not benefit? Obviously, will benefit makes it? Or is this a gray -- or is there a big gray area of marginal benefit, medium benefit, good benefit, high benefit? And in that gray area, is there a decision process that patients and doctors make as to whether they opt to move on or not?

Yes. Great question. So I'm going to -- instead of using the word gray area, I'm going to use the word yellow light. So we talk about green light, yellow light, red light. And then we also talk about where the yellow light needs to shift, okay? So -- and this is for the telehealth screening, we have green light. We know they will benefit from it, no question. We have red light, we know that they won't and then we have yellow light. What we kind of do is we've expanded the yellow light into the red light to say, hey, let's -- we're not sure the telehealth screening clinician thinks that they're not a good candidate. And then the yellow light, we send a clinician into the home to put a mark kit, which you guys will see, to put a demo kit on them. At that time, we kind of narrowed -- there's still a yellow band, right? So sometimes we know green, sometimes we know red, we still know yellow. At that point, if it's yellow, then we want to get the circle of care involved in the patient. to let them know, okay, this will move your arm. If you don't have shoulder movement, for example, you may not be able to get to your mouth to feed yourself or your arm is too big, you may only be able to get to cohere. We try to explain clearly to everyone clinically what we believe is going to happen. In addition, we explained the work they're going to have to do to even get to that point, therapy multiple times a week, right, for multiple weeks. And then we try to allow the circle of care to decide. As it turns out, interestingly enough, when I've been around these conversations, generally, the circle of care wants to do anything and everything they can to help this patient get better at all. And usually, the one who doesn't want to move forward is the patient after thinking about it. That's at least been my experience.

And they don't [indiscernible].

I would be speculating, do they -- is the juice worth the squeeze? Is all the work going to bin them? And sometimes is the -- I think the patient is thinking is all the work that I'm about to ask my spouse and family to do to help me? Is it worth it for everybody as well.

We have one last question from somebody on the webcast. Are there major differences between cost per lead for TV versus social media advertising? And do you see differences between conversion rates of patients who come from these 2 channels?

So the cost per lead is a little bit different. I will say with TV, there's an overall lift across the board. So if I stop doing TV ads, my social media cost per lead would -- our experience has been it would increase. So TV is beyond the how much I paid for the ad and how many times the phone ring. TV does convert a little better just for the simple fact that we get them on the phone. So they're making that outbound call. We say, hello, there's no phone tag, right? When someone fills out a form, they don't answer the first time we call them. And when we get them on the phone, as mentioned, they're not ready for the conversation. So sometimes it's -- I'm on the way out the door, can you call me back later. So we do like TV for the overall lift and because when we're an inbound call center, it's just a lot quicker and easier through the front of the process. Good question. Okay. Harry?

Okay. Now over to the exciting stuff. All right. My name is Harry Kovelman. I am an MD. I'm the Chief Medical Officer at Myomo. I have about 25 years of experience in the rehab and orthopedic world, been at different companies, as you can see on the slide. And I've been at Myomo about almost 5 years. The hockey picture, there is a message here. So that was a picture of me when I was about 14 playing in Canada, junior hockey. How many people are familiar with the 1980 Olympic hockey team that won the gold medal. -- raise your hand. Okay. So their journey was really nice, right? Her Brooks, coaching them, college kids, the journey was really nice. But if they didn't win the gold medal, we probably won't be talking about them. My journey here at Myomo, our journey has been really fantastic. We got operating efficiencies. We got CMS approval. We're getting some in-network provider agreements. But to get to the pinnacle to the milestone of $100 million, okay, it's all about the win. It's about I need to make sure that every one of the patients that walk in the door that qualify for everything Micah said, we can facilitate getting a pre-auth or an authorization from the payer. That's my goal, and I'm here until we achieve that, okay? So I'm going to talk about my department. My department works on after they come over the wall, okay, they've been screened successfully. They come over the wall. My department is really responsible for collecting the medical records. and the physician's order proceeding, submitting all the documentation to the payer, okay? That's what my department does. So it's been really good in some aspects when I look at it in my 25 years. And in other aspects, there's been a lot of face wins. The tailwinds is we got Medicare Part B. We're doing really well on our appeals at the ALJ. We're getting some in-network provider contracts. But what's heading us off, right, what's causing us to be a little stagnant is we are working with these MAOs or Medicare Advantage organizations that are providing an obstacle for us. And I'm going to go into why it's an obstacle and why I think we're going to overcome the obstacle, and I'll show you some reasons. So how big is my department? What goes on here? So we have 15 patient navigators. These navigators have 1 director and 2 leads. So it's very hierarchical and everybody is managed to the best of their ability. They guide patients through the MMO journey. They call the patient, they help them set up the doctor's appointment, they communicate with the doctor. They get all the documentation and they really provide and facilitate the journey, but the journey doesn't end there. There is specific documentation that needs to be collected in order for us to submit the pre-authorization request. There is a checklist by CMS, by traditional Medicare and by me, okay? Because at the end of the day, we need to document medical necessity. Once all that paperwork comes in, once all the paperwork comes in, it goes down the hallway and it goes to the clinical appeal specialist. They write the pre-auth and/or the appeal depending on if it's a first-time submission or we got denied, okay? Now they have been trained excessively, okay, on the documentation of medical necessity by Medicare guidelines, by the Medicare program integrity manual. I cannot review 150 submissions every month or 130 submissions. So I have to have a team that's responsible. They're mostly OTs. They know what the rules are, and they follow it, not only do they review it, they have to sign a document to show that they reviewed it and they agree that it is medically necessary to submit. Once they get that done, -- it goes back over a wall, and it goes to the insurance coordinators. The insurance coordinators submit the documents to the payer, not in the case of Medicare, we don't need to do that. We don't need a pre-auth. And they work with the payers to obtain either the authorization or the denial and they continue to verify, calculate out-of-pocket costs and obtain single case agreements if we need it, okay? Last but not least is research. We have 3 people in the research department. I'll talk about that in general as we go on, but this is my department as a whole. So where are we today versus where we were prior to receiving Medicare approval, okay, or CMS reimbursement. If you look at Q1 2023, you'll see that most of what was coming in from the revenue side, I'm doing this for our CFO. I usually don't talk about this, okay? The revenue side was Medicare Advantage plans, okay? Medicare Advantage plans. 47% was the VA, okay? -- was our channels, our OMP channels, right, and then others, okay? So now what happened in 2025, a huge difference, a huge difference. 59% is Medicare, 18%, 18% is now Medicare Advantage and 23% is other. So it's been a huge shift in the business, and there's reasons for that. So why? What's happened, right? What is the headwind to us? The headwind is really the Medicare Advantage organizations. It's not just us that experience it. I speak to colleagues, I speak to people in medical device, CMOs, everybody's experience, I'm sure as investors, you see it in the news, okay? The MAOs, their profitability is on a decline, they've really tightened up what they're approving. And even when we appeal it, they're tightening up. The pre-authorization rates are low, the denial rates are high. It really is costly to take these people all the way down and do the appeals. So as you can see here -- sorry, sorry, let me go back. As you can see here, the MAO or the Medicare Advantage Organization auth rate in 2023 was about 37% -- so out of every 100, 37 we were getting off. Now it's about 15%. Huge difference. absolutely really tough headwinds. So what are we doing? What can we do about it? So here's how we overcome the denials. They're usually in 3 groups. I see this all the time. They come on the denials, and here are the 3 reasons. The first bucket is experimental and investigational. So what is an investigational device or a drug? An investigational device or a drug is one that's waiting for an authoritory regulatory body to approve it. Well, can't check that box. We've already been -- we have a 510(k) exempt. We're in the EU. So we really can't be considered investigational. Well, what about experimental? You see that all the time. Yes, we do. But the classic definition of an experimental device or a drug is one that's awaiting to be -- to show its safety, efficacy or effectiveness. Can't check that box for us. We have over 25 peer-reviewed publications with impact factors ranging from 1.4 to 5.7. Does everybody know what an impact factor is or okay. A impact factor is like the strength of the journal, right? 10 is really high, like New England Journal of Medicine is up there. One is average in medicine. We're ranging anywhere from 1.4 to 5.7. So very, very well-established peer-reviewed journals. I already went over the definition of E&I. And again, we are a 510(k) exempt. FDA knows about us, and we have a device listing. So we really don't fit that definition of experimental and investigational. So Harry, what's the next bucket? Where are you seeing? Not medically -- my God, I spend every day going over medically -- the patient being fitting the criteria. So when you look at medical being medically necessary, there are certain programs, manuals, guidelines out there that give us this guidance. Number one is the Medicare program integrity manual. So the specific rules that give you the guidance, are you fitting the definition. In the Section 13.5,.4, there are 7 foundational statements. I'm not going to go each and every one of them. If you want to know them, please send me an e-mail, I'll be more than happy to go over it with you. But we make sure -- when our writers get the information that we fit that criteria. So if I go to an administrative law judge hearing, I can say, "Hey, you're onor, we fit this, and they can't consider us medically necessary. We make sure the chart notes from the physician have every detailed point about when they had the stroke, what is their range of motion, documentation elasticity and/or tone, prior treatment, have they failed it? They need to improve their ADLs. So it's a very, very thorough process. And that really takes a lot of time. The last bucket that we really don't see anymore, occasionally, somebody will try to fit it in and this is where I know they're just templating it. They're really not looking at it, is they'll put in there, you're not covered by original Medicare. That's an easy one to overcome. We are covered by original Medicare. You all know that. So I get all this information, we submit how long does the process take from getting the information to getting an approval or a denial and taking it all the way to what we call an administrative law judge hearing, which is specifically for Medicare Advantage enrollees. So on average, it can take anywhere from 5 to 10 months in the process. Remember, they got to be screened. They got to get to the physician. Physician has to write the notes. We got to submit. We got to wait for the first denial or the auth, then we got to submit for the second denial. Then it goes up to Maximus, which is the qualified independent contractor for CMS that reviews it. Maximus, 97% of the time, it's actually 96.9%, but 97% of the time, they agree with the lower court decision, so to speak. And that -- I have to wait for that denial to take it to an administrative law judge hearing. So it's a very, very long complicated process, and it takes -- the patients can get frustrated. But that's why we have the patient navigators. They're constantly calling these people and communicating with them. Okay. So what is an administrative law judge hearing? An administrative law judge hearing is the Office of Medicare Hearing and Appeals. I get all the documentation together, and we go to this administrative law judge hearing. It's telephonic. I appear with outside legal counsel, who's representing the patient. I give the medical testimony. I give the medical testimony. I'm going to go into the legal argument in a minute, okay? All those notes that I told you about are somehow given to the judge -- and I have a summation of it that I give to the judge. Basically, we want to stay on the phone for no longer than 20 minutes, okay? Also, when you go to these administrative law judge sharing, a lot of it is the luck of the draw, right? There's x amount of ALJ judges, some more favorable than others as is in with any court system. What are we doing to date? As of yesterday, as of yesterday, we are winning 58% of our cases that go to ALJ. So Harry, is that good? Is that bad? Where does that sit in? When I speak to peers, legal counsel and others attending, even John Naft, who's in the audience, they will tell you, in the absence of an NCD or an LCD, which we do not have, their win rate is about 30% 30%. We're almost doubling that. So is the process and the demand of gathering the paperwork and everything we need working? My answer is it is. It is working. And we're going to continue to take all these MAOs to ALJs as long as the documentation is correct and as long as they continue to deny us. So remember, I said I present the medical testimony. Here's where outside counsel. We work with an individual who I've learned so much from, I can't give enough kudos to, but they present the legal part of it. And remember, I told you there's codes, okay, and there's a Medicare program integrity manual. This is what our position is. And obviously, it's working. There are 3 rules, laws, statutes, whatever you want to call them, that we make a point of to the administrative law judge. Number one is CFR 422-101A. It's the Code of Federal regulation. It specifically states, specifically states that MAOs must cover everything, everything that is reasonably and medically necessary for Medicare beneficiaries and must cover all services and devices covered by original Medicare. So original Medicare doesn't pay for investigational experimental devices, end of conversation. So they have to pay for our device. Our device is reasonably and medically necessary. We get the paperwork to document that. So we have a very strong argument. The second reason experimental or investigational devices are excluded from Medicare coverage. CFR 411.15. Like I said, we're not an experimental or investigational device or else Medicare won't be covering it. So check that box. The last one is a unique one. So what we believe per 422-101B, plans do have the right to come up with a policy Plans do have the right to come up with a policy, but it can't be an exclusional policy. It has to be an inclusional policy or else they're denying access to care for the Medicare Advantage beneficiaries, which Medicare we give them. So they can't take a commercial policy and say, that's it, we're not covering. What they should be doing is say, "Hey, here's our inclusional coverage criteria for the MyoPro. If you meet A, B, C and D, we will authorize it. So there's -- again, I just want to emphasize, there's a medical portion and then there's the legal portion. So what's the plan? How do we move forward? Where are we going from here? We're going to continue to write our appeals. We're going to increase the number of ALJ hearings. We're going to continue to take them. We're going to review, and we're going to keep on going. I was averaging 5 to 6 a month last year. I'm doing about 12 a month now, okay? Even with the legal fees, our outside counsel, it's still a good contribution margin activity. You can tell I'm the medical guy. I really don't understand all that stuff, but that's okay. We're going to publish an MEO review paper and submit a 1-year outcome follow-up manuscript, again, adding to the publications. We're going to continue our research efforts. And last but not least, we're going to enter into network contracts to become an in-network provider. So Harry, what is that? And what is it doing for us? So here's what I want to show you. So as of yesterday, as of yesterday, this is where we sit with in-network provider contracts. We are -- we have access to about 27.2 million lives as an in-network provider, okay? That can lead to a policy change. Remember, you have to have a contract and then you have to have a policy on it, okay? Not always do both entities talk to each other. But when I submit that pre-auth, the first thing they look at, they look at the submission in Myomo, MyoPro in-network provider, yes or no. That determines whether it even moves to the next step. So while we've signed all these, okay, and we're working on geofencing to these areas, right now, most of these were signed in the last half of last year and the beginning of this year. I suspect we will see some return on this, okay? So that's where we are as of today. Okay. With that, I think I'm going to entertain questions. So any questions? Yes? Yes.

[indiscernible]

So I'm going to defer to our CFO for that. I kind of keep the blinders on from the medical perspective, try to keep a separation of church and state. So I hope you can appreciate it, David.

[indiscernible] The real variable activity is the legal cost. And so if you take the appeals legal costs and you spread it out over the -- all of the appeals that we undertake, it's only about a few thousand dollars of incremental cost. So if you get an authorization at $50,000, it's a good activity to continue to do. And he's going to bring on, he talked about increase the number of appeals, he's going to have 1 additional person to help him with that. But that original person is already here. So it's not even really an incremental cost. So it's a good activity to continue to pursue.

[indiscernible]

So I would love to do that, right? Each administrative law judge hearing is in a de novo hearing. So we submit prior auths from if we got that payer and we're taking to them, but it's a de novo. We also have the ability to submit to the portal showing them without showing a video without the device and with the device. I believe you're not allowed to contact them in person in this process. I see anywhere I rarely see the same judge twice in a year. Sometimes I do. Again, a lot of it has to do on the submission, right? There are some judges that are more favorable than others. But we don't -- we can't touch them in person as of today. Yes.

Scott Henry, AGP. With regards to the MAO authorization rate, as you mentioned, it went from 37% to I think around 15%. And you're doing all of these different things to improve that, where do you see the end game? Is it to get it back to 37%? Is it to stop the decline or maybe even get it higher than 37%?

So the end game is win, right? I think it's incremental. I think when -- what you're seeing now, there's an association called MDMA, Medical Device Manufacturers Association. They're working a lot with CMS to kind of send a message to all these MAOs that, hey, you have to follow the rules and regulations. We are part of that. As we win more ALJs, it's costly for them to come. okay? Sometimes they'll submit a positional statement to the judge. And then there's other times where I've been on the administrative law judge sharing and there's 4 people from the payer there, which can include the CMO, the Vice President of Compliance, their Medicare Advantage person, their contract person, it can really go an hour and 20 minutes, right? I suspect that as these other plans who are, I guess, willing to work with us more, as the tide rolls and we start to change, I would expect to go from 15 back to where it was with an end game an end game that, hey, we are in network, we are a provider, and we have a change on the policy. That to me would be the end game.

And then just one final question. obviously, Medicare has been a big boom for the business. Not trying to predict the future, but if you think out just 1, 2 years out from today, do you think that environment, which has become more favorable is likely to continue to improve to stay the same? Or could it pull back? How should we think about that category if we can think about it at all?

I don't know if I can -- I don't know if I'm the right person to answer that question, right? Because when -- remember, when they come over the wall to me, so to speak, right, I am looking at papers and documentation, are they an appropriate candidate. That's what I look at every day according to our fitting criteria, according to tone specificity, are they appropriate? If more appropriate patients come in, more appropriate patients will be fit, right? So do I hope it increases over the time? I do. But I don't know if I'm really the right person to answer that. I'm sorry, I'm not trying to get around it. I hope that happens. Yes, I want it to happen. I'm sorry.

How has the ALJ win rate kind of progressed over time?

Yes. Great question. Nobody -- I didn't think anybody was going to ask that. So 3 years ago, when we really started to get into it, we were at about 28% -- it progressed to 34% to 42% and now it's upwards of 56% to 58%. So it has progressed. But you know what, I've got -- we've gotten smarter, right? We hire -- we have the right people working with us. We're using the right tactics now, and it's been really a learning process for me as well.

In the case of the ALJ denials, do they give you kind of rationale as to why? And then to go back to like the initial denial, what percentages are the different reasons what that the Medicare Advantage players give you?

Yes. So I want to laugh, but it's really not funny, okay? Because when we go to the hearings, we are basically saying -- we are basically -- it's the same dialogue every time, right? Because we get the same denials every time. We have one judge favors rules in our favor and the other one doesn't. It's like -- or he or she doesn't. Did they even -- your question is, when I look at it, did they even read it? Because what they'll say is, no, your device is still experimental and investigational, right? Okay, no per CFR, whatever, you don't fit into that criteria. I find it motivates me to get better, right? How do we overcome these? It still goes back to -- remember, when they send the denial, not medically necessary and investigational and experimental. The judge either finds for it or they find against it. Over the last 3 months, -- the CFR, those ones that I put up there, every judge recently has been quoting that. No, you have to do this, okay? And yes, it's medically necessary. So John is here in the audience. I know John goes through a lot of ALJ hearings. He could comment on that as well, but that's what I'm seeing.

What percentage of patients are dropping out in the process, right, after the initial denial to not get kind of all the way to the ALJ hearings?

Is Micah here? Micah, what percentage are dropping out? What percentage as they come in and go through -- go through the process, drop out before all the way through. So they get -- we submit the pre-auth, maybe we get a denial and then they're dropping out from that point on. Sorry...

So the question is, is how many -- when you get to the point of having an authorization, how many ultimately drop out and don't continue with the process. They enter the backlog at that at the point where we have an authorization to enter the backlog and about 20% of the backlog will drop generally each quarter. Did I get the question .

[indiscernible]

There's even a step before that because we -- even before the -- we get the final denial for Maximus, they will -- Harry's team will actually triage and see which of those patients might be appropriate to move forward to the ALJ hearing. Some even drop out and you won't go to the -- Yes. So -- and that can be a good number of them. I mean I don't have a metric off the top of my head of exactly how many that is. But Harry, he talked about his objectives. I think last year, we took about -- was it 50 patients to...

50 we won.

So we took 50 patients to ALJ hearing. So there is a weeding out process and we're looking to then increase that. And he's looking at -- we're adding more resources because we're seeing more success, and we're going to be taking more people to ALJ hearings try to get more Medicare Advantage authorizations. So I'm going to turn this, I think, to keep things on schedule. We'll go ahead and introduce Kathy Sawyers.

Hi, everyone. I'm Kathy Sawyers. I'm the Senior Director of Clinical Outcomes here at Myomo. And I'm a physical therapist and also an assisted technology professional. I've been with Myomo about 5 years. And before I came to Myomo, I spent many years in the clinic doing multiple things. I was a Director of skilled nursing. I was a Director of Clinical Operations for Heart Institute. And I've done many things in health care leadership, have a lot of clinical experience. Throughout that time, I've kind of kept my hands in patient care. My primary focus at Myomo is to enhance our clinical outcomes. And I also manage our training team, and I manage our MyoCare team, which is the team I'm going to tell you about here in just a little bit. I also collaborate myself and my team. We collaborate with the engineering team and the product management team to ensure that our products are usable for our clients. And we also -- I also collaborate with the business development team so that we get the MyoPro name out there so that therapists know about the MyoPro. So what problem are we trying to solve with the MyoPro? Basically, we are trying to give those patients with neurological deficits from stroke, brain injury of some sort of brachial plexus injury or spinal cord injury. We're trying to give them their own motion, and we're trying to give them more function. So 800,000 people have a stroke per year approximately. But out of those 800,000, only 250,000 of those people have a chronic arm weakness. And again, I mentioned some other diagnoses that are appropriate for the MyoPro, again, traumatic brain injury, brachial plexus injury and spinal cord injury. So what is the MyoPro and what does it do? The MyoPro is a myoelectric brace or orthosis that uses myoelectric prosthetics, robotics and neuro rehab, and it wraps it all into one device. And the difference between using a prosthesis myoelectrically and using a brace myoelectrically is a big difference. when you don't -- when you have a prosthesis, you don't have a limb to put it on, right? You're using a robot basically. When you use a brake, you have an arm. You have a weak arm, a heavy arm, arm that may have neurological effects like does anyone know what spasticity is here? Okay. So spasticity is that resistance to motion and it's abnormal tone, people don't control it well. So we are using the MyoPro to help, again, control that. We use our sensors that listen to the EMG signal that we use our software that magnifies the signal so that it allows the arm to move and power the motors for that. Also, the MyoPro teaches that brain and muscle connection so that we get muscle memory back and neuroplasticity. So Michael was saying that not everyone is a MyoPro candidate, which is absolutely true. So what do we do to ensure that we have the right people? We do a full medical history. We do a cognitive screen because cognition is extremely important for the MyoPro. We also do range of motion like passive range of motion, active range of motion. We check their spasticity and tone level. We check to see if they have caregiver support, and we also use our Mk unit. What is the Mark unit? Well, we use the Mk unit to test the EMG signal, and I have one right here. So the Mk unit is basically our test unit. Our clinicians use this in the field to test the MyoPro and the patient. So you can get the EMG level that the patient can that can -- the patient can create and then we use again our software to magnify that signal. It's an adjustable brace, so it fits most everyone that can fit into a MyoPro. And then the patient gets to put it on their arm. They get a feel for it. They get to see how it's going to feel, how it's going to look, although I will say that the Mark unit isn't a great depiction of what the MyoPro really looks like, but it gives the patient an idea. By the way, when someone puts a mark unit on, most of the time, it's the first time they move their arm in years. So it's pretty impressive. So we have 2 different MyoPro devices. One is the MyoPro Motion W stands for wrist. So we have -- the wrist is -- it's supported and then the elbow motor functions in the Motion W. The MyoPro 2X Motion G is the device that we just released in April, at the end of April. And this is a version of that. It comes in pretty colors too, like the one you see on the screen. So the Motion G is for grass, stands for grasp. And you have the elbow motion and the open and close of the grasp. Okay. The clinical team really has a finger on the pulse of what's going on with our patients. And in doing so, we want to share that information, collaborate with our product management team and our engineers to make sure that we, again, are getting a product that's usable for our clients. So the MyoPro 2X was -- one of the goals was to simplify the dawning experience and promote greater independence of dawning for the patient. So if you take a look at the screen here on your left, we have a dorsal handstrap. Patients who present with their arm and their palm down usually are able to use this dorsal strap for dawning. So they place their hand in the MyoPro on the handhill and they secure the strap over the top of their hand. Some patients present with their palm up, okay? And so that spasticity doesn't allow them really to get their palm down well. So we created a handstrap that allows patients to put their hand in neutral to get into the MyoPro. This is a way that we can serve more patients with the MyoPro. We -- again, we understand their presentation, and we know that it's not a one-size fits all. We know it is not the same -- everybody -- not everyone is the same. So what is Myo? So MyoCare is our post-delivery program that Micah talked about. And we have several therapists, OTs and PTs alike, who we have recruited that have a heavy neurological background, and they've been out in the field, out in the clinic and their expertise is in stroke management or neurological disease management. So basically, we've kind of set them up into different groups of people. The clinical coordinator is the role that starts the process after the MyoPro has been ordered. The clinical coordinator contacts patient, they give them a call, they talk to them about their baseline goals. They talk to them about going to therapy, and they gather information about do they have a therapist locally available to them. If they do, we try and train that local therapist on the MyoPro if they're not trained already. If they don't, then we go look for a therapist in their area. So we have to be particular about this. A, it needs to be a neurotherraapist. They need to be able to take the patient's instruments, and it has to be within distance that the patient can get there. So this is a fair amount of work. We have 2 people doing this job, and they split the United States into North and South. So this person is not on the screen, but there is a clinical trainer, and you're going to meet Stephanie here in just a minute. So she's kind of our sole clinical trainer. She -- once we get the therapist information, she goes to work and she offers them a 90-minute live webinar or she offers our Myomo Academy, which is our clinical modules that are online. And then she can follow up with them thereafter as needed. Once the MyoPro -- once the RMO or the regional manager -- sorry, we just changed their name. Regional MyoPro Orthotist delivers the device. then they pass it off to the regional clinical specialists. The regional clinical specialists are PTs and OTs. There are boots on the ground that go and help train the therapist and spend time in the clinic with the therapist doing that hands-on training with the patient as well. They follow the patient for about 6 months, and then they hand off to the MyoCare coach. The MyoCare coach carries on sort of like a telephonic case manager, if you will, but they can also do telehealth. Just to back up for a second, we have 12 regional clinical specialists and a couple of managers in that role, and then we have 2 MyoCare coaches. So here's the layout of our region map. And you can see that they cover a fair amount of territory. There's a lot of travel to get to in-person visits. And so we supplement that our efficient -- to improve our efficiency, we supplement that with telehealth. In the future, we prefer to shrink these territories so that they are a drivable distance. We also want to continue to get the MyoPro socialized out to those therapists who are a neurotherapist. And we want to create a certification program for therapists. Right now, we have a certification program for CPOs and our internal therapists. -- but we don't have a certification for therapists. Therapists like to have certifications behind their name. So we want to roll that program out. And in addition to that, we'd like to be part of the core curriculum of the OT programs in the U.S. So this is a map showing our 1,600 or more trained therapists that we have. You can see we have a fair amount of trained therapists in the east side of the country, but these therapists have been trained. But just like everybody else, they change jobs, they retire, they go home and have a baby and never come back to work. So we're constantly training people. I would say that 70% of the MyoPros we deliver every month, we train new therapists for. So we're trying diligently to make these therapists experts on the MyoPro. And when you train people new, new, it's a challenge. So [ Stephanie Dunaway ] is going to come in here in just a little bit and talk to you -- show you a demo of the MyoPro. But she is kind of the sole OT that has been leading the charge for training. So we have a P.E.R.L. Program, which is a protocol that we share with therapists. And this is a protocol that we shared that we try and get the MyoPro integrated into the regular therapy sessions. We recommend 10 to 12 weeks of therapy at twice a week and then one-on-one therapy sessions, 45 to 60 minutes. That's a lot of therapy folks, and that's just the minimum. So I told you we have a certification program for our CPOs. We do. And we have a certification program for our internal regional clinical specialists or therapists. So this is just a little snippet of what they learn for the MyoPro 2x. We have an online version so that they can do some prerequisites. Then we train them hands-on in all the MyoPro devices, and we have a hands-on lab test as well as certification test that's written. And we ask why do we put all this effort into our patients and our clinical outcomes. So you need to meet Sandra. She's kind of a superstar. She's 62 years old. She had a stroke at age 37. She had right arm weakness. So for 25 years, she has not been able to use her right arm. And she's one of those people who had minimal tone and spasticity. And so she's done very, very well. Let's see what she has to say. [Presentation]

You can hear the RCS in the background, they are with the patient. [Presentation]

So Sandra has gotten her life back with the MyoPro. I spoke with her just recently, and she is doing really well. She's so happy that she can move her arm and use her arm for function. She actually works at Chick-fil-A and she was able to wear her MyoPro to work the other day. So I'd like to introduce you to [ Stephanie Dunaway ]. She is our clinical services manager. She has created all this content for our training, and she does a phenomenal job. And Stephanie is going to demo the MyoPro. Do we have anybody here on a short sleeve shirt? Anyone? Do I -- sir, excuse me. Yes. Would you mind being our demo person for the MyoPro, please? Yes. So we're not going to put -- the MyoPro is custom fabricated for -- particularly for patients. Yes, if you can stand right here, that's great. The MyoPro, as you know, is custom fabricated for patients. So we don't have one your size, and we're not going to take the time to put the mark on you, but Stephanie is going to use a tethered device to kind of show you how the MyoPro works. Okay? [Presentation]

All right. Well, thank you. So we've come up on noon. So for those that are on the webcast, we're going to break here for a tour, and Colin is standing up. He'll -- raise your hand, Colin. He will take you over to the next building at 45 and do a tour for you. For those of you that are on the webcast, we have a video of that same tour that we will launch here momentarily. And then after that, we'll be on break until around, I would say, 12:35 p.m., maybe 12:40 at the latest, and we'll start back up again. So we'll see you in a few -- about a half hour or so. And then by the way, for those outside here, lunch is right outside. So when you finish the tour, come back, just grab it and then we'll begin the presentations again. [Presentation] [Break]

All right. So I'll go through our manufacturing and operations processes. I'm Colin Anderson. I'm our Director of Global Operations. My background is a little over 15 years in the medical device industry, primarily in orthopedic implant manufacturing and then kind of moved over to Myomo. Been in a lot of different operations and engineering roles, streamlining production, reducing costs, kind of scaling with small and large companies, depending on what we're doing. And then my educational background is I have a masters and mechanical engineering and also an MBA from Darden. So I'll go through -- again, I know we just did a tour, but we'll go through a high level what that process was, again, with a little bit more detail. And for those of you online, you'll get a little bit more information than maybe the video had. But we'll go through making a MyoPro. So you can see there's a lot of different components. These are high level of various things that are on our 2x device. You can see humeral cuff, finger saddle, things like that. Those are the orthotic shelves and then motors and various subassemblies that we put together as well. So this is what our manufacturing process map looks like. So you can see starting on the left, we start with the shape capture, which we've talked about a few times, and then we go all the way to shipping to the user on the right side. So we go through shape capture, model generation. We saw that. That's where we're customizing the design. Then we go to first station where we're making the subassemblies. And model generation, we sent the file over to our 3D printing supplier out near [ Worcester. ] And then we're also receiving in our motor kit assemblies -- sorry, motor kit assemblies come from near [ Worcester ] and then 3D print suppliers in the Boston area. But all that stuff gets you net first station. We move through our in-process inspection steps, final assembly. We kit all the various ancillary goods that the users will need go through a final inspection. We ship it out to the user. And then like I mentioned before, we have a 3-year warranty on the device. So if there's any issues, users can contact technical customer support. We can bring the device back if we need to for service and repair, and then we can go back through our outgoing inspection process and ship the device back to the user. So as you saw, we have our remote shape capture kits. We have a whole bunch of them on their shelf. They go through a process of their own. So they go through a sanitization process and a maintenance and calibration process after they come back from the user, and they get ready to go out on the shelf. And then once we ship them out, the user engages in that shape capture process with our clinician, then they come back to us. So they're in an ever-going cycle. We have probably like 35, 50 of them just kind of going in and out of the building. After we get all the measurements, we go through generation where we create those shelves, like I mentioned, we also create all of the user-specific dimensions. We move to first station, a lot of tabletop equipment. So low capital investment, a lot of labor in this process. We have laser cutters, which I didn't show on the tour, but they were in the video. And then we also have the shelves that come in from an outside supplier. We go through in-process inspection. So we benchtop test the motors, verify dimensionally everything. We make sure our liners are the right size, zone properly, everything fits okay. And then we move to final assembly where we build the finished device. So right now, we have 4 different workstations set up. Like I mentioned, we have a capacity of about 120 units per month on one shift. So as we build the device, we route the cables, we glue things together. We put different pins in, we rivet different things. Then we kit the device. So they get spare batteries, or charger, manuals, laptop, carrier bag. That's all put together, and it moves to final inspection. At final inspection, we go through a full functional test. So we didn't get to see it on the tour, but they'll do exactly what we did in the demo today, and they'll actually actuate the sensors and make the arm move, make sure the motors are responding properly. They make sure it connects to the laptop that goes out with it, and they make sure everything is on the laptop that we need. We then pack it up into a box and it goes on the shelf waiting for shipment for when the user needs the device. So now kind of shifting gears a little bit, recap on the manufacturing process. So what have we done over the past year? So one of our main things is we've been scaling our capacity proportionately with demand. So as you can see, this is the total number of shipments that we've had over the past 12 months ending at the end of Q1. We have a capacity right now of about 120. And the main way of increasing capacity is through hiring additional labor. So we've increased head count on the assembly floor. We moved here in January of 2025. So that was an interesting process. As you can see, volume was a little bit higher than it had been previously in the year. So moving with a higher volume coming over here, that was a good exercise, and we were able to lay the floor out really nicely here to get much better process flow. And then as I mentioned a couple of times, the quickest way to increase capacity on the manufacturing side is really just adding a second shift and bringing in more labor. We have all the equipment we need. We have the floor space. So that's the quickest way to grow. So what did we do when we moved here? Well, we outgrew our headquarters in Boston. And for those of you who have seen it, it was a very small space. We have much more space here. And what we did was we laid out our floor, and we're only occupying half of the first floor in a much more efficient way for the material to flow. So as you can see, we kind of have a little loop that everything runs through. It comes in our dock on the bottom part there, and then it comes through raw materials get inspected. They then work their way over to first station. We make all our subassemblies and we process everything through just the way that I showed you on the tour, and it goes back out the door. We're continuing to expand. So we're growing into the second half of the building. We're expecting to be in there in July. So we're about a month away from having that space open to us. There's 3 main things we're doing. We're increasing office space. So some of our operational folks are up on the second floor. We want to move them down closer to manufacturing. We're increasing our production capacity. So we're increasing floor space. And we're also increasing our engineering development space. So we're building out a larger model shop kind of prototyping area. The overall goal here is that 3-year objective. We need to get to 250 units a month. That will help us hit that $100 million a year goal. Streamline the product and process flow, as I mentioned, make more space for product transfer. So we don't want to introduce new products into our cramped existing area. We want a new spot to put MyoPro 3 into. Continuing our in-sourcing and continuous improvement projects. So those are focused on cost reductions and efficiency and then also mitigate supply chain risk with increased safety stock. So how do we do that? That means that we need to have a larger area for our stockroom. So right now, it occupies about half the space that you see here. So we occupy the top half right now, and we're taking over the bottom half. So we'll increase the size of our stock room. That will help mitigate issues where you have a sudden supplier closure or something like that, and we need to make sure we have enough materials on hand to mitigate that risk and keep production flowing. We'll enable ourselves to in-source some of our core subassemblies, which I'll go into a little bit more on the next slide. And then like I mentioned, give us flex production space to introduce new products. increase our R&D area and then also, again, increase that stockroom capacity. So cost reductions and risk mitigation. So we're targeting about 200 basis points of gross margin improvement on a quarterly basis by the end of 2026, so Q4 to Q4. How are we doing that? Here's 3 kind of primary examples. So with our new space, we'll have room to in-source some things. So we're really good at assembly, as you saw. We do a lot of assembly operations. One of the components that we don't assemble in-house right now is that elbow motor and that grasp motor. So we can bring the assembly operations of those in-house, reduce costs approximately about 15% is what we have right now as our target. The [ FE and SP ] joints as well, there are parts that are on the wrist area of the device, in-sourcing those assembly operations. One further thing is eliminating the laptop that goes out with the device. So that's a large piece of COGS. And we're doing that through the introduction of a Companion App, which Malcolm will talk about when he comes up here. And then labor optimization. So we're really focused on implementing lean manufacturing on the manufacturing floor. So that's going through a lot of different training, teaching people the various tools, how to streamline things and eliminate waste in our various processes. One of the big things here that we noticed recently was we spend about an hour cutting Velcro to put the liners on the device. So how can we automate that process? It's a custom device that's kind of difficult. So we did figure out we could use our laser cutter, we could write some code and we could generate these patterns that we need to have for each device, and we can cut that Velcro out and basically reduce manufacturing time by an hour. So we're working on projects like that. And like I said, about 2% gross margin improvement is what we're looking for. And with that, I think any questions? All right. Then I'll hand it off to John Frijters, and he'll go through international operations.

You talk about one shift today that's basically 40 hours a week, 5 days a week? Or how do you manage it?

So we are 5 days a week, roughly 40 hours working a little over time with the fluctuations in demand, but it's one shift, varying people from the manufacturing side, fulfillment side and then all the inspectors as well.

And would the employees be willing necessary to work a shift and a half work on Saturday or Sunday, [ during months ] where demand is higher than before...

We have done that in the past. So we have a really good workforce here. They're pretty dedicated to the mission. They like the product. They do come in over time. We work on weekends, if necessary, depending on demand fluctuations. So we have that core team already.

Order flow from kind of point where you know you're shipping a device, you've got the order, payments confirmed. How long is like before actual delivery, you start making the device here?

Yes. So our overall manufacturing lead time varies a little bit. But on average, we're around 10 business days. So if we get the order in, we need the measurements, we'll ship it within 10 business days. We can expedite on occasion. Typically, the turnaround time can be a little bit longer than that, but we'll finish the device. And then I showed that picture where there was a bunch of devices on the shelf. So like I said, we finish typically before we need to ship it. So it will sit there and go out once the patient is ready to receive the...

Sit there for a couple of days....

Yes.

Just broadly speaking, it's a very high-margin business, but any impact from the tariff environment? How do you think about that? How could that impact you guys?

Yes. So obviously, constantly monitoring that. It changes daily, weekly. We really haven't seen much of an effect. We think maybe up to about 1% gross margin impact on that one. I think we published guidance on that in like April. It's really not much of an effect. We have a lot of local suppliers. So I mentioned the motors come from here. Their suppliers, obviously, if it's an electronic come from overseas. But we have dual sources in there. Things are pretty efficient on that side of it. Textiles are really the only thing that's affected. So the bag or maybe the liner materials, they come from overseas may be affected by tariffs, and that's not a very large cost in the product. So not a big impact.

From an R&D perspective, what is the competitive landscape out there? And do you have IP protection to ensure that this device does not get jumped in the market?

So I'm going to pass that question to Malcolm, and he's going to present on it later. So maybe you hold your question and then you can ask again when he's up here. Any other questions?

Where do you see yourself getting to like a year or 2 from now from a manufacturing standpoint on a monthly basis?

In terms of volume?

Yes.

So like I mentioned before, we're shooting for that 250 units a month target in about 3 years. So we'll be scaling proportionately as demand comes in pretty -- I mean you saw kind of some of the projections of how we're getting there. It's kind of linear, a little bit more than linear, but... All right. So I'll pass it off to John Frijters, and he'll go through our international operations.

I don't see what you see. I only see myself in the screen, which is a great picture, but I don't know which slide you see in front of you. So if you could showed it up here, it would be awesome. So it's good afternoon from Germany. It's almost 7:00 in the afternoon, and we had a very nice and hot day, 90 degrees Celsius plus, which is without climate, obviously a warm day in Germany. My name is John Frijters. I'm signing responsible for international operations, which is basically the business we have in Europe, a little bit in Australia, and I'll show you around it. So the first slide you're going to see is Slide #86, I believe. I joined Myomo in 2020. Before that, I did some consulting work as in between jobs and then joined Myomo as Managing Director for Myomo Europe GmbH. GmbH is Gesellschaft mit beschränkter Haftung is equivalent to Inc. So we're a wholly owned subsidiary of Myomo, Inc. based here in Germany. The city we're based in is Göttingen and Göttingen is actually in the bull's eye of Germany. So we got the North, Southeast, West Autobahn connections here, pretty decent drives for all direction. Berlin is as far away as Munich as it is the rural area. So from a sales and business development position, well established to do business in Germany. I've always been more or less the last 30 years of my career in this like environment. So orthotics, prosthetics, DME equipment, wheelchairs, mobility solution, neurological rehab and also most of my career with Ottobock, but also some start-up experience with the previous company, ReWalk, that actually made exoskeletons for [indiscernible] individuals and joined that deal. From education, I have a biomechanical engineering background and an MBA from Kellogg in Northwestern. And with all we do, next slide, please, that shows 87 to me, where our focus has been on international, but specifically on Germany. So the slide you should see in front of you shows $4.7 million in revenue in 2024. That kind of 96% of that is revenue in Germany. We do have some business in the U.K. We have some incidental business in Australia. We're trying to grow that, too. So there's a lot of opportunity in other markets, but our focus really has been on Germany and building a team and a business here that is sustainable and can grow accelerated in the years to come. Next slide, please. And that has to do with the reimbursement environment in Germany, which is favorable for MyoPro. We have about 82 million people living here in Germany and everyone without exception, has health insurance. That means that if you qualify and you're insured by a German health insurance, specifically statutory health insurance, your odds are close to 100% that you will be eligible for a MyoPro device. And if you consider that there's 150,000 stroke survivors in Germany and that those stroke survivors have likely statutory health insurance and those are eligible for a MyoPro fitting, we were well advised to focus the builder business in Germany first. And so far, we've been successfully with launching MyoPro here in Germany and had over 50 statutory health insurances covering for a MyoPro. That means those patients that had a stroke had a brachial plexus injury and traumatic brain injury that actually went through the funding process, got approved the MyoPro. And that's 50 out of the 96. So we're close to over 50% of insurance companies that actually had a funding experience and helped us to build the process. We've had insurance companies that said this is new and innovative. We've never funded it before, and we don't know if we have to or can pay for it. So they decided to reject the application and go to what we call the social court appeal process. You have a round of appeals where you do it in a dialogue with your insurance company. If they continue to denial, not open for your argument, you can then actually take it to social court. And the social courts actually look at what you're entitled to under the rules of the statutory insurance rules, so the lawmakers. And we've had 100% success rate so far. Actually that we filed claims on the [ Halvor ] in cooperation with insured people that actually then eventually or at the end of the process got approved for the MyoPro. So that means that not only can we get paid for it, but then they can do it voluntarily following the rules or will be forced and arm twisted by the social court to actually pay for the MyoPro. So it means that if we go out and talk to patients, qualify those, we can give the statement that if you are technically physically cognitively qualified, you have the EMG, there's no contraindications, you're eligible for MyoPro, you stick to the process, you will end up with receiving your MyoPro, which is a good statement we can make. Next slide, please. It means that the patient journey in Germany is that we have to reach out to the percentage of the 150,000 stroke survivors that we see in Germany that have insurance. And a lot of those actually find us through social media, Facebook, Instagram, but also to Google search. We've been feeding with artificial intelligence lookup guides like ChatGPT or other AI channels that write about MyoPro and more and more people show up online. Also through prescriptions, therapists, the O&P industry, the orthotics and the prosthetics industry, the CPOs that we see actually start providing those patients. Once we are in contact with a candidate, so potential MyoPro user, we'll see them in a live in vivo testing. That means our clinical team and also business development managers go out and meet with the patients either in a clinic at their physiotherapist or occupational therapist or at their CPO's office or at the doctor's office and actually, we do a screening with the patient. That means we want to make sure that we're really certain that it's an eligible patient that there's no contraindication, that they're physically capable that they can actually do something and get the best functionality out of a MyoPro. And that screening is also used to produce the evidence that we need to actually get the funding process started. So once these patients are tested and screened, considered suitable, then they actually step up to the next step, and that means they get a prescription. And I'm looking at Slide 89 right now that shows the patient journey as I don't see the slides, just checking. So you get a prescription for your doctor, that's bullet #3, a letter of medical necessity and the doctor is also seeing videos of the screening that they do. So it's an informed decision by a medical professional to prescribe a MyoPro. And they also then actually learn about the MyoPro so they know -- they're aware of the product that is out there, and they can start considering to stop botoxing and start prescribing MyoPros in the future. That package goes out to the insurance company. That insurance company has to review it. Eventually, it leads to an approval that we've just learned. And once the approval is there, the scanning is done, the measurement is done, the device is fabricated. It goes to the O&P clinic and the O&P clinic by law fits the patient. So in Germany, we haven't touched on that. We are not allowed to fit the patients directly. We're kind of a licensor state. We have to work through the CPO's office who also hold the contracts with the insurance company. They'll eventually fit the patient and they get funded for that. Once the patient is fitted with a MyoPro, it actually comes to a very important stage. This is where the user or the candidate with the MyoPro has to learn to use the device to eventually be able to use it in everyday situations, by themselves, become independent and restore functionality can be able to use both hands again. So that means that in some cases, in point 4, though, and that's the next slide, we do not always get a direct fitting from a funding application. Only 10% of our applications go directly from the funding process into a direct approval. And a direct fitting does not mean that we fit the patient direct as Myomo. It means that we get a definitive fitting without the trial, without a longer period test session. So the application goes out to the insurance, the insurance said that you have evidence, we fund for a bespoke device. In 65% of the funding application, though, the insurance companies have reasons to believe it might not be a suitable product because it's new to them. They're not aware of it. They might think it's not something that the patient is actually willing or capable of using. So they go through a trial period. And the trial period is a 6-month window where the user has to show progress. So without capabilities of doing anything without the MyoPro, at the end of that 6-month trial course education, training, they have to show progress, but they also have to show that they can actually do activities of daily living with a MyoPro. Now to ensure that in that relatively short period, and it maybe sounds long to you, but most of the patients we see are 6 or 8 years after their stroke, after their incident and have shown a track record that everything else has failed. So we get a kind of a difficult patient population to fit with a MyoPro, and we have to show an acceptable and positive outcome in the 6 months, and that's why we've installed MyoCare. And MyoCare is in our program in Germany, where we work with the therapist, we work with the end user. We see the person on a screen, on a video, but also in live sessions every 3 or 4 weeks, we'll go out there, reach out to the therapist, educate them, support them and help them to actually get the results that we need in that 6-month window. So then actually from that, we get a definitive fitting, we get the approval by the insurance company that the user can continue. It is not as easy. It's a lot of touching and work time with the user, but it also gives us a competitive advantage. It's unique in the industry. It's unique to this product. And as this product is new, we're kind of setting the stage. We're kind of raising the bar because we're making something that is difficult, very possible. And we also show to the insurance companies that whilst we do it with the price deck that we have, we're actually prove the evidence and we produce the outcomes that they see that they get money for their investment, and it's worth spending the time. We're also building trust. That means that this is unique and gives us also a competitive advantage. When you go to the next slide, it shows the revenue distribution in Germany. We've currently talked about the direct fitting of 10%, this is where the -- between the application that goes out to the statutory health insurance, it's an average of 200 days. Then we get the approval. The user receives their MyoPro. That will not be taken away from them. It's not a test. It's something they can keep for life. And we still support it with our MyoCare program, so they get the results and the ADL outcomes that they're expecting. The 65% goes to a trial. And out of the 65% of trial patients, we get currently a 35% conversion rate. That means 70% of our revenue currently relies on the combination of trials and conversions, and that's something that we have to actually work on, improve on and continue to grow. That also shows, on the next slide, what we're going to do to make sure that, that number continues to grow, our total revenue, but also the importance of our trials and our conversions, in the next slide, Slide #92 on my sheet, is we're going to enhance or enlarge the team. This is still a country where people buy from people. People want to be having a positive experience to actually spend and invest in the activity that we see. The PTs, the OTs, the CPOs, the insurance company, they are following results. And to make sure that we're doing these handholding with the patients, with the new therapists, with the CPOs, with the new partners we sign up in this market, we have to cover some open areas. So we have to hire more people, specifically CDMs. We have to cover more areas. We have to make sure that we can keep up with the growing number of inquiries, that we can keep up with the number of trials, that we can keep up and secure and even improve our conversion rates by being there more often and also, at the same time, building our pipeline for 2026 as well as the years to come. So scaling the team, managing the user connection, training new therapists, reaching out to medical professionals, that's where we probably actually are investing time and effort: to hire more people. When you look at the next slide, our development and growth initiatives are really starting with scaling the team. We need qualified and skilled people. We need to find them, recruit them, hire them and train them. The majority of our team members have not had a field travel experience. So there are clinicians from a clinic and actually, we put them in the cars, put them on the road and have to work them in a sales style, business development style organization, which is a bit different than patient care. So that's where you need a specific type of person and you also need a specific training program to make sure we can do that exceptionally well. And our past years have shown that we're on the right track to find the talent that we need, recruit them, hire them and also keep them. Once we have a larger team, our areas get smaller, our frequency of contact can increase. Our downtime of driving, Germany is a large country, goes down, and we believe we can do more contacts and produce more results. That also means we can reach out more to the medical professional direct. We're doing a lot about social media, which is digital advertising, which has been successful. But we also want to be in the doctors' offices, spend more time with the therapists, build our pool of key opinion leaders, go out to the neurologist that has prescribed the MyoPro in the past and ask them to do more in the future. And that means that we want to work on MyoPro becoming a standard of care for stroke patients where traditional therapies and medication have not shown the results and the outcome that restores functionality of the affected site. Once we have a larger team, we can intake more inquiries, we can up our marketing and advertising congresses, symposia and actually do more. We're currently on hold because our team size is the bottleneck to growth. When we have more people, actually, we can spend more money and grow and scale faster. And a part that we're doing is we'd like to keep the company lean, it's digital. Everything is field-based, it's digital. It's remote office-based. But also our processes, we want to make sure that they are smooth and slick and lean. A part that we've done last year is we've done and installed an online screening. So we don't have to do a lot of phone calls upfront to find out that the user is not suitable. The user goes to the website. They go through a self-screening process. And only when they actually are qualified on a certain level, they can sign up to be contacted. That means that our hit rate of the inquiries that we get has improved, and we don't have a lot of downtime, and we're not spending a lot of time, everybody's time, on contacting, calling and following up of candidates that actually eventually show up that they're not a suitable MyoPro candidate. And then the last slide, if we continue to do what we did in the past, we really believe that by 2028, we can do $15 million in revenue or more in the future. So if we're on the momentum as we are, continue to scale and grow the team and be as successful as we were in the past, we think that's a bright future for Germany and beyond. That's it in a nutshell from International.

We're going to take some questions from the audience if they have any, and we'll hand you the mic if you have some. Just a second, there is a question, John, so we'll get that for you.

Okay.

John, thank you. I hope you're able to get dinner and we haven't interrupted you too much.

Actually, you did. That's okay.

Okay. So one question about patient follow-up after the MyoPro is delivered. Can you -- in Germany, do patients get a therapist on a weekly basis to help support and train them on how to use the MyoPro? Because I was surprised that the conversion rate after the trial is only about 35%, which would suggest that many of the German recipients are not -- have not learned how to use the device properly.

That's a fair question. So what do we do and why do we have the results, that's your question, correct? We do follow up with each individual. And it's independent if they get a definitive fitting, where there's no risk of the device being taken away, or if it's a 6-month trial. And in reality, it means that within a frequency of every 3 to 4 weeks, our clinical trainers see the user because, in most cases, it's new to the user. They have not done this before. It's very often also, almost in every case, it's new to the therapist. So they haven't worked with the MyoPro. So we've got a combination of 2 people who have not done this before. We've also seen that for some patients, it's difficult to learn. In Germany, most of our users are at the end of their therapy options. So they've really come a long way of trying everything else to restore functionality of their hand and of their arm. So we really get the difficult ones. That means we're on top of things here as good as we can, train them, educate them, and coach them. And in between the 3 and 4 weeks, there's always a follow-up by phone or video call. People can always contact us in either the CDM direct, the BDM direct. There's always somebody in the team available to support that and give them the coaching and the guidance. That means that -- there's reasons why it's 35% for now. One reason is some patients are good on paper. They're good in the screening. They're good in the submission. When it comes to actually doing something, it fails. Reasons are they get a second stroke. Reasons are some circumstances in private life made the MyoPro less of a priority. It was harder than they thought it was. The therapist wasn't as good. And sometimes it's us. We were a small team last year. We did not have enough people. So we couldn't do the quality of training or be there more often as we should have been or could have been. So our results of $4.5 million could and should have been better if we had more people. Unfortunately, we also had people from a second or a third stroke and also dying during the program. So we lose those 2. Fortunately, that's only a small size. We also have candidates that get so well and get so good that we've seen that they kind of don't need the MyoPro after 6 months anymore. So they walk out with a restored function without the MyoPro. And curing and healing, actually, the MyoPro has helped them to recover and gave them a lot of less bit of a shove in the direction of where it needed to be. So the 35% has upside potential for us in outcomes if we can do it better, more with a higher frequency. But you'll still have a patient population that will stop using the MyoPro as it is as they've learned it's too difficult, too hard, too fatiguing or secondary circumstances prevent them to continue to use the MyoPro. Does that answer your question?

It does. Thank you. There is a question that came from online. And the question was, and I'll go ahead and answer it, is International profitable? And so it's a question that there's a business answer and then there's a statutory answer. When you're doing business in a foreign country, the objective is that they want you to be profitable because they want you to pay taxes. And there's only so much that you can of headquarters type of costs that you're allowed to allocate to a different country before they say, "Time out, we're going to audit you." And so yes, International is profitable on a statutory basis today, which is why when you look at the income tax line of our P&L, you see that there's income tax expense, and that comes from Germany. And that is because they are generating a statutory profit. But if we were to allocate headquarters costs and other costs to Germany, as we do the direct billing business here, we lose -- we're in a loss position in the U.S., and Germany would be in a loss position if we did that. But we're physically unable to allocate a lot of those costs because of transfer pricing rules. And there's another question. Just a second, John.

When the 35% or 37% are returned, when the -- sorry. The ones that do not continue after the 6-month trial, is Myo compensated in any way for those devices? Is there like rental or leasing?

Absolutely. So what happens with the ones that don't convert out of the 65% that we do? Some of those users are not counted as conversion because some of those go into an appeal stage. They have a functional outcome. They've shown progress. The insurance company denies or doesn't recognize that and they say, "No, it's not good enough. It's not enough of what we see." So we appeal for those. So they may come into the bucket of a conversion at a much later stage. It can take 2 years until you actually get a court approval. So they will be later on added to revenue, but they're not recognized as conversion. That's fine. Second of all, we're using a fleet of inventory, which consists out of motors and parts, that are refurbished. So it's a refurbishing of -- it's ecological and economical. In our trial sessions, we don't use new equipment all the time. We're using the custom parts that are new and individual, but we're still using the motors and the parts to refurbish those that's returned to the U.S., then are actually brought back into the fleet and they're used for the next trial. And yes, we do get paid for our trials. Our trials consist out of paying for the device, but also the insurance pays for the training. And in the device cost, our cost of our MyoCare support are included. So that is covered by insurance. It's not something we do for free.

Yes. So just to elaborate a little bit about that, a little bit more. Generally, a trial will be around $20,000 depending on the exchange rate for that 6 months. And that fee is nonrefundable. So that allows us to take revenue when that trial commences. And then if there is a conversion after that, as John mentioned, that device is returned to the U.S., we're not going to have them keep a device that has used motors on it. We will ship them a brand-new device, and then there will be another charge for the final cost for that conversion. Are there any other questions? All right. John, thank you very much. Go have dinner, and I appreciate your time.

You're very welcome. Enjoy the rest of the day, everybody. Bye-bye.

Okay. So again, Micah Mitchell, I'm going to talk about the O&P channel now. And for many of you who may not know, but we had an experience with the O&P channel in the past. So I'm going to first rewind to talk about what happened in the past, so about 8 years ago, and then we'll talk about what is an O&P provider and what do they look like today, and then we'll go into the things that we're doing and what the future may look like. So when we first had the MyoPro to dispense, had to choose a channel common for manufacturers. You don't -- the first thought is generally not to go direct to the end user with a custom fabricated orthotic. There was no decision-making process. If we wanted a channel to sell through, it was going to be the orthotic and prosthetic providers who employ the CPOs who are required to dispense a custom fabricated orthotic. So we had a team of about 10 clinical sales reps. These were fantastic professional sales reps that were really good at cold-calling, outbound calls, having conversations. They came to us with many relationships within the O&P community. And the idea was to meet with the O&P provider, help them understand our product, the reimbursement, the technology, the patient, how to generate referrals and then sign them up to be a center of excellence. I mean, on the one hand, we had great success signing up centers of excellence. On the other hand, sales were not following. And so at that time, as a one-product company, to help the centers of excellence that had chosen to carry our product, to help them actually sell more units, we began to help them. So we began to do some social media advertising and some other things like that so that they could generate some patient flow, so that they could sell MyoPros. That worked well. And so then we would have screening days. We would schedule them at the O&P clinic or at a local hospital or a rehab facility, have multiple patients show up. We would be there along with the CPOs that work for the COEs, and we would help them evaluate the patients so they could build their pipeline. And sales did not follow. We heard things like, "I'm getting denials," "The funding is a challenge," so we brought on our previous Chief Medical Officer, and we built kind of a team of funding experts so that then we could also help the O&P channel with some of the funding challenges. We were doing a good job supporting them. And while they were trying to navigate sort of the MyoPro journey, they had another business to tend to as well. They had other patients coming in the door. And ultimately, we didn't feel like we could control our growth as much as we wanted to at this point as a one-product publicly traded company. So we made the decision to also start our direct billing channel. We didn't totally put the O&P channel on pause. We continued supporting those that we were working with, but we were not out recruiting new centers of excellence, O&P providers to dispense our product. As it turns out, we learned so much from our direct billing channel. We learned a heck of a lot about the product, a lot about how patient -- a lot about how stroke patients present. So clinical protocols, we learned a lot about the funding process. And we learned so much more than we even thought we could while, at the same time, we controlled our own destiny and we're able to grow sales and all of those things. So now that we've had -- Medicare has begun to cover the product and with all of the things that we've learned, we have recently relaunched heavily into the O&P space to sign up more centers of excellence. So now let's kind of talk about what does an O&P provider look like. So it wasn't that many decades ago when health care was all centralized. So you go downtown, you'd have the medical district with all the hospitals and rehab facilities all in one location. A patient could leave a facility after a stroke or a spinal cord injury, go across the street to a company that probably was a full [ to new post ] provider, durable medical equipment, prosthetic-orthotic supplies. They could get a cane or a walker or a hospital bed or diapers or a wheelchair or a scooter or a respiratory oxygen machine, prosthetic-orthotic. And oftentimes, there was even a pharmacy in the back; mom-and-pop shop, where a patient could sort of go across the street from the hospital and receive everything they needed. Again, that's not very many decades ago. A lot of things have changed over the years. One is there's generally not just a hospital district, right? So we have hospitals all sort of spread out at this point. Due to sort of clinical expertise required for new products due to reimbursement where some products are profitable and many are not due to private equity roll-ups, a lot of other reasons, the industry looks a little different today. So you tend to have sort of, for example, a respiratory or an oxygen provider, that's 90-plus percent of their business. They may do a few other things here and there to please a referral source or a patient. Home medical equipment and orthotic and prosthetics, for the most part, sort of split. The expertise to know all of the orthotics and prosthetics is -- it's hard to do a whole lot of other things as well as referral sources and whatnot. So today, the providers that we deal with almost across the board focus on prosthetics and orthotics. And the prosthetics part of their business has grown quite a bit lately. So those are the folks that we sell through. Whether they are part of a national company or a local mom-and-pop shop, usually, each individual clinic looks about the same. These are not as large as our facility that you just toured. They may have anywhere from 3 to 13 employees at the facility. They have patient rooms where patients are coming in. They do have a fab shop in the back where they are fabricating some of their own prosthetics and other devices right there. We think that about half of the industry are sort of national companies, and there's a handful of them. And then the rest is kind of split between your regionals, maybe 20 or fewer locations, and then your locals as well. A few key things for them is one is they tend to have in-network contracts, which is something, as Harry mentioned, we've begun working on with our direct channel as well. They have that in place. If they're a local provider, it's probably state-specific. If they're a national, it could be a national contract as well. So we have recently restarted going into the O&P market. With the -- Medicare began last April. We hired a handful of people, a couple of sales reps and a few clinical trainers, and then began to engage with the O&P community. Last year, I would -- sorry, let me -- I've got a few videos here. [Presentation]

So Aaron is a good example, a family-owned business, although he's growing quite rapidly. He was exposed to the MyoPro with our first iteration 8, 9 years ago, and he chose not to pursue it at that time. We've reengaged with him, and he is very excited and he's early in the certification process. And we'll kind of go through that process here in a minute. So initially, we did a soft launch last year. There were a few things that were happening. Medicare had begun to approve the product. The MyoPro 2x, which we just launched a couple of months ago, we knew was right around the corner. The certification training is intensive. It's multiple days. I'll elaborate on that shortly. But we felt like it wasn't appropriate to go through a full certification process sort of at the end of last year when we began to launch this and then have to do it again. So we did create an opportunity for O&Ps to get the first part of training, which is a couple of hours of remote training, to learn indications, contraindications and basically learn how to evaluate a patient to know if it's green light, yellow light, red light, and so they could sort of build their pipeline. However, we were required to come do the clinical work with them. So if they had a patient where they got a prior auth and were ready to move forward, we would be involved with that. We had great success with that in that we learned that we could recruit COEs. They were even more interested this time than they were 8 years ago in the MyoPro, the funding situation, the reimbursement. And so as we've relaunched it in full force, we've immediately gone to those that did the sort of initial training last year, so they could start the formal certification process, and I'll show the details for that. We're still very early, but there's a few questions that we've been trying to answer along the way. So the first is, can we get a commitment from these O&P owners, managers, decision-makers to carry our product. And it's more than just a, "Yes, ship it to me, we'll put it on a patient," it's a full commitment to, first of all, have their clinicians come out of the clinic for multiple days to train. Out of the clinic means no revenue for the local clinics, so there's a commitment there. Our post-delivery protocols are extensive. A lot of orthotic and prosthetics you can sort of deliver and you don't have to put as much time into it after you've sort of been paid. For our product, we're requiring them to commit to a MyoCare-type program where they will continue to provide clinical services and not get reimbursed for them for each MyoPro patient that has been delivered. So we've had success getting the commitment from a sales standpoint. I don't want to say we're batting 1,000, but almost. They really are interested in our product and doing what we want them to do. Committing to the clinical aspects, yes, they were all making that commitment. We're very happy. What we have learned is our funding is not the same as all of the products. So kind of all the things that we've learned that Dr. Kovelman mentioned, we are teaching them as well. They are learning that. So we've proven that we can teach them the funding aspects. Kind of the bottom two things on the screen are those that were -- the jury is sort of still out on those. So for example, we have some small orthotic and prosthetic providers, I think $1 million, a couple of million dollars a year in revenue, who then have to get to a point to commit to purchase our product for around $30,000. And sometimes that's a big financial risk to a mom-and-pop shop. And in some cases, they are hesitant to do that, which we understand. Even for some of the well-funded larger O&Ps, there is a sort of a financial risk aspect that we are having to help them navigate. And then finally, as we think long term, where every stroke patient early in the stroke journey, obviously, the first week or so, you're trying to stabilize and figure things out. If you end up with hemopoiesis, the next few months is very fairly intensive therapy regime. It's kind of the beginning of the stroke journey. As we look into the future, and we want every stroke patient to be introduced to the MyoPro very early in the stroke journey, that's a big step to take. Can the COEs take that on their own? Do they have sort of the marketing ability, willingness and salesmanship to help us get to that point? We don't know. We will get there. The question is, along that path to get there, how much of the lifting are we doing? How much are we doing with the COEs? And how much are they able to do on their own? And again, we're so early in this that we don't know exactly what that's going to look like yet. So high level for an O&P to get certified on our product, it starts with several meetings and them needing to commit. And in almost all cases, they do, although we have had a handful of O&Ps who've chosen not to proceed even after the initial conversations. After that, they do an initial remote eval training, same thing we began offering last year, where they kind of begin to understand a little bit more about how a stroke patient presents and what it would involve working with our product. After that, when we kind of get to the top row far right, that's when they really -- their time commitment really -- when we come to their site, we're going to be there for a couple of days. We require that they have multiple patients with good payers, so it might get funded ready for us before we get to their facility. We also ask, since we're going to be there, line up some in-services. So something like a room like this, but full of therapists, so that while we are there, we can also do an in-service for their current referring therapists to help them. So that's our eval certification day 1. The idea is we let a lot of therapists know about this local clinic that's carrying the MyoPro. We are with them there, by the way, so that they can continue getting referrals from those therapists, build their pipeline even above the few patients that we're seeing together when we're with them. Then we leave. They go back to their regular work. And once they have authorizations and they're ready to deliver the MyoPros, then we come back for fitting day 1. Now fitting day 1, there's training before, training during the fitting, training after. Fitting day 1, we kind of do most of the work. Fitting day 2, we sort of share the work. Fitting day 3, they do most of the work while we are observing, followed by a test. It is likely that, in most cases, fitting day 1 is a month before fitting day 2, a month before fitting day 3. So sort of this journey from a COE committing to us going with them each patient, and again, we're investing to make sure that their clinical care is appropriate for the MyoPro, this journey is going to take some time. Fitting day 1, we're selling them a product and they're getting reimbursed. Fitting day 2 and 3, they are also buying the product from us. But once they're fully certified, that's when we're hands off and they are placing orders and we're shipping product. And that's when it starts to get exciting for us when we have more and more certified COEs. We began this process just when we launched the 2x end of April, early May. And we found that most weeks, we are initiating the certification process for multiple O&Ps each week as our clinical team has grown as well. [Presentation]

Okay. So when we chose to go direct to our direct model business, it's interesting, we can kind of see our O&P revenue just kind of slowly decrease, which we understood and expected at the time. And then as we began to launch this last year and this year, we're looking at $20 million in revenue in 2028. We have the infrastructure in place. We have the reporting in place. We have the people in place. Obviously, as we grow, we may need to add more people to this program but right now, with a couple of business account managers, which are sales reps. And I think we have 4 clinical trainers on our way to 5 and 6. We are getting great early traction and very pleased with the metrics. So how do we get to the $20 million? So there are still a few things we don't know because we're early on this. So the sort of the X-axis, the certified CPOs indicates our ability to recruit and train and let these folks get certified. We're very pleased with what's happening there. We think we will continue to grow with several thousand sort of facilities and, I don't know, about 10,000 CPOs out there. And the early success that we're having, again, these numbers are well within reach. So if we think about sort of the middle of the yellow, kind of if we have 200 -- I'll use my little pointer here. So if we have 200 CPOs trained, what we don't know yet is how many units per year, MyoPro units per year, will each CPO do. So when we go to a clinic, if they have a handful of clinicians, they're generally giving us their best clinician, the one who's clinically the best, not the worst. And so the best clinical -- the best clinicians also handle other complex products. So it's unlikely that any clinician will only handle a MyoPro. However, I do think there will be many CPOs who dispense one or more MyoPros every month. There will likely also be folks who go through the full certification process and fail to launch. So they choose to decide that it's not for them or something else happens. So we land on, which is hopefully a conservative number, 4 MyoPros per year. Frankly, if you're doing fewer than that, you're probably not doing enough to stay good at it. So you really need to do 4 or more per year. But if we have 200 certified clinicians, each doing 4 units per year, 800 units per year, a couple of million dollars a month. And so from here to 2028, that's sort of the plan to get to $20 million. As time goes by, similar to our direct billing channel, we are dialed into every metric. Kind of we showed some stages from intake to telehealth screen. There's a dozen or more metrics between each stage, and we're very dialed in. We're just learning the metrics for this channel. So we are measuring them and watching them. We're very confident in the trajectory. But as time goes by, we can sort of narrow the chart down a little bit to be a little bit more specific. Okay. So of the 3 folks you've heard, so the first, a gentleman who spoke, Aaron, he's kind of what I would call the regional. He's sort of a family-owned O&P practice with kind of in the 15 to 20 locations. And then the second video, the one you just saw, was a family-owned practice with one location. Now we're going to hear from one of the national providers. [Presentation]

And a couple of things to highlight from what Roger said there is, first of all, they're a national company and kind of their stance, which we encourage, is he doesn't want all of their clinicians to handle the MyoPro. It doesn't make sense. They've chosen one clinician to handle the MyoPro, who will be sort of the clinical expert and the evangelist. And then that clinician's job will be to go to their other branches that eqwal owns, help them understand the MyoPro to where they will sort of at least, for its first phase, become a referral source internally and then they'll parachute in the clinician who's the expert. And again, the clinician who is the expert, they expect him to also be the evangelist. So his job is to kind of go to the other clinics and then let the other CPOs generate referrals. Another interesting thing, they have a lot of locations, a lot of employees. He's thinking 20 or so pipeline adds and about 5 deliveries. And I think Roger is an experienced industry person. And so that seems like a reasonable number to us. Some people may feel like it's sort of a low number, but we do think, as someone's beginning to carry our product and they understand the funding environment and sort of how the pipeline works, that is a reasonable number. So with that, I'll pause and take questions.

I believe there's a fair number of CPOs that you had trained and/or certified, I'm going to be mixing up where they were on the journey. But at least so far, the training that they've gone through has not led to them bringing in patients and fitting them. And I'm just trying to understand here, in the early part of this O&P channel development, what is -- why is it, I guess, that the CPOs are not embracing this opportunity more proactively and fitting more patients? It seems as if -- to repeat what I just said, basically, you're introducing CPOs to the device and what it can do for their patients. They're excited. But 3, 6 months down the road, you're not seeing 4 or 5 fittings per CPO, you're seeing 0 in many cases.

Yes, great question. So I'm going to try to rewind some slides without starting a video to sort of address that. So we did, what I call, a soft launch of the O&P program last year. We had Medicare coverage. We quickly hired a team. We developed an infrastructure with contracts and websites and training and all of those things and then began to train the field. There were a few issues for us. Again, one is we had a better product launching this year. So we were hesitant to fully certify with multiple days on the other product. In addition, we were fabricating product in a basement in Boston and our capacity to manufacture more MARK units, more demo devices was limited. So we're prioritizing all of the different business things. So we chose to do sort of a soft launch, which is really the COE commits and the initial eval training. And then some would then follow through and say, "Hey, I have 5 patients, come out and help us." So then we would come out and help them. Others would not follow through. And in addition, so there is a national provider, probably the largest in our space, who has 15 certified clinicians already on the MyoPro 2x on the new product. They had over 100 clinicians go through the eval training. So I think when we shared this many people went through the eval training, there was a national provider that accounted for more than 100 of those. Those 100 clinicians were not allowed to sell a MyoPro, they just went through the initial eval training. So as they were fitting like ankle braces for stroke patients or other things, they could sort of look up and then become a referral source for the 15 certified clinicians, again, for that particular national provider. So there were a handful of reasons why the sales didn't follow. Some of those reasons we understood going into it. But we feel like this full launch with the 2x, with our hands on in the clinic, with our follow-up, ensuring that the in-services are being scheduled, and if they won't schedule them, we'll help schedule them through or for them, and we believe that we'll have more success this time. The only question that we can't answer at this time is will they have so much fun or enjoy it enough that they'll keep doing it, will they get reimbursed once they deliver it, will they appreciate the clinical outcomes, will they enjoy working with stroke patients and all of those things. We don't know that yet. But sort of the lack of pipeline growth in Q4 when we began doing the eval training, we think that's going to look a lot different with the full certification launch.

Maybe just on kind of -- in respect to the kind of '28 number you gave us for O&P. But maybe on kind of an interim, how are you kind of comping or what's your expectation of your people running this channel as far as what is success this year? How are you defining success? Is it number of CPOs certified? Is there a certain amount of units per the ones you've had onboarded for a quarter or 2? Maybe just help us.

Yes. So from a broad level, macro level, the way we handle it is similar to our other businesses. We get the right leaders in the room, and together, we develop a plan using reasonable metrics. Our main measurement now is those that are in this process. They've initiated the certification process. That's our primary metric today. And then we have an operating plan with the revenue units where we all sat down and thought through all of the math, how many calls, how many begin the process, how many in the process, how many referrals, to kind of land on our quarterly delivery number. So the leaders of those 2 teams are very in tuned to those metrics. Separate from the leaders, the others are not. So kind of from a high level, what this plan is, if our hypotheses that went into the operating plan are correct and if the leaders control the things that they can control and we get enough people to sign up for the certification, that everything else will take care of itself.

I'm curious, of the certified O&Ps, what percent or what proportion of those were original MyoPro-certified O&Ps back in the day prior to the Medicare coverage?

Great question. So there's 2 aspects. One is they're going through the certification process. And two is they're fully certified. No one has made it through this full certification process since we launched the 2x. There were a few O&Ps that were certified before this, that still are. And then there was a national provider where we certified 15 of their clinicians with 2x before we launched the 2x. So fewer than 20 are through the finish line and able to order on their own -- fewer than 20 humans, right, clinicians, can order on their own without our help. Those that are in the certification process, we haven't shared in the past, but I will share the first few weeks of this, we were making multiple visits per week, and we had different people going to different clinics to where -- and we expect that to continue. For those weeks that we want to be in the field certifying O&Ps, we think we can certify multiple per week. Now again, that's the eval training. And then a month later, we go back to the same clinic. And then a month or 2 later, we go back to the same clinic, right? So this whole process is going to take months, yes.

Just one more. You had mentioned that some of the big national providers have certain contracts themselves with payers.

Correct.

Could that at all be a help when it comes to getting coverage for something like MyoPro? Or is that generally on a payer-by-payer basis?

Great question. So there's 2 types -- 2 things on the payer. There's policy and then there's network. So I'll use a Medicaid plan. It doesn't matter if you're a -- for most state Medicaids, they do not cover our product yet. If you're a provider in a state, you have a contract with Medicaid. Your contract with Medicaid doesn't help you provide a MyoPro because there's a coverage issue. So them having contracts is unlikely to help with the coverage issue. But Dr. Kovelman's -- we're making progress along those. However, there's in-network, out-of-network. Insurance companies are trying to hit a certain number of sort of patients who are in-network versus out of network for a whole lot of reasons. And it's not even uncommon for our direct provider business. Occasionally, a provider wants to send them to someone who's in-network. So that will absolutely help them. Good questions.

Wondering if you've considered rehabs as a potential channel. There are some very large national players that are growing very quickly.

Yes, absolutely. So I'll kind of go back to the stroke journey, someone has a stroke, we would like them to be exposed to the MyoPro at the right time, but early in that journey. First 2 weeks is too early. One year is too late. So when is the right time? And through that journey, they make a lot of stops, right? So maybe there's an outpatient rehab facility, maybe there's a skilled nursing facility for many. So our plan is to do the right things and go to the right facilities so that every patient that passes through has an opportunity. Frankly, if one of the large hospital chains called today and says, "Hey, I have 100 hospitals. Every Tuesday, I want somebody in my hospital for a stroke clinic." We really can't handle it today. Now as we make progress with the COEs in the O&P channel, we have more certified people throughout the country so that we are getting into a better opportunity to accept those calls or to do our own work to make things like that happen.

And do you view the channel as a purely incremental opportunity? Or is it a way to shift some of -- kind of as a strategy to shift some of the business consciously to the channel from the direct business?

So our direct business, again, from a marketing standpoint, we focused on the prevalence for a whole lot of reasons. There's also a channel conflict conversation that happens from time to time. So we've chosen to focus on the prevalence, I think, the right choices at the right time, and we've learned a lot about that. As we ease into the incidents where we really want every stroke patient to be exposed to our product early in the process, really the O&P channel is a significant part of that plan. And so we think it's -- we think it needs to happen altogether as we get to that point.

Got it. And can you elaborate on the channel conflict process that you have or may put in place?

Yes. So when I think about what we don't want to happen for channel conflict, we don't want to take a whole lot of Myomo employees into a well-known stroke rehab facility to do an in-service. And while we're on the way out, one of our customers -- or while we're on the way in, a customer is on the way out, having just done the same in-service. So that's an easy example of channel conflict. Among other things, we consciously chose to -- so when I think about the big rehab hospitals and clinics, we made a conscious decision to delay those relationships. And again, we're still young and growing, but that was also -- channel conflict was a part of the equation to delay that. So now that we're taking the next steps, we want to continue to manage channel conflict the best that we can. We've had -- for our O&P customers, we hear more concerns about channel conflict before they begin the process and begin working with us. And once they begin and begin working with us and understand how we handle all of these things, the concerns tend to go away for the most part.

Just somewhat of a follow-up to a couple of the earlier questions on this. How should we gauge progress towards reaching this $20 million revenue goal? Because we have got legacy CPO agreements, you've got ones in progress. what metrics can we look at? Or should we just look at revenues, assuming those will be broken out on a quarterly basis?

Yes. So let me tell you the metrics I'll be looking at. And I think the decision hasn't been made yet on what metrics we will choose to share. But for what we're looking at today is how many are in the certification process and, to summarize a few other metrics, how far am I scheduling out to start the certification. So am I -- if someone calls today and wants me to show up next week for the eval day, that's a problem with my pipeline. If someone calls me and I can't get to them for 3 months because I'm so busy, that's a problem with my pipeline, right? So I'm measuring how quickly I can get to them and how many initiate this process and are in this process. We haven't chosen yet what we will choose to share with you all on this channel yet.

Yes. So right now, we currently disclose revenue by channel. And so at a minimum, we will continue to do that. And if there's other metrics that we feel, as this continues to grow and things that we end up looking at to help us forecast the business, we may look at sharing that with you in the future. But we're in a learning process right now ourselves with that channel because we're really in the beginning stages of trying to grow it.

Just to repeat the question I had earlier, I understand you're going to certify a fair number of CPOs going forward. The part that I still don't -- I'm not convinced about is that after they're on their own, they're going to be productive and, let's say, fit 5 patients a year or 10 patients a year because, as you mentioned earlier, with the first soft launch last year, the answer was 0 effectively. And so the question is, going forward, what more can you tell about the launch in 2025 that would give me confidence that you're going to get much more traction with the CPOs? Because I've heard in the past that many of the CPOs are kind of lifestyle employees where they're doing good, they're helping patients, but this is not their priority in their life and they may not follow through as much as you'd like in terms of being adopters.

Yes. So again, last year, it was -- for them to go through the eval training, they could sit at home and fire up their screen and go through our 2-hour webinar, okay? So now it's a full commitment, multiple days, multiple patients. We won't even come to their facility unless they have at least 3 patients with good insurances teed up, ready to do evaluations, and we push for the end services as well. So we're getting a little more commitment on their end. We have a stronger team in place also to not only follow up with them and nudge them, but to help them with insurances and generating demand and all of those things. Will the sales follow like we want them to? We don't know, right? We'll dial into more metrics as we go. From what I'm seeing now, to have 200 certified CPOs by 2028, it seems like something that we could potentially achieve a year ahead of time, right? So we're having no issues getting them certified. Again, can they get the patient flow? We hope so, but we don't know. Now when I think about referrals and channel conflict, there are some things you can dip your toe in and other things you can't. So this is, I think, the right time to have -- to put this program in place along our journey to, again, the big goal of every stroke patient, being exposed to the MyoPro very early in their post-stroke journey.

Are there any early adopters that have really embraced this and done well with it that are not affiliate CPOs like Jon Naft? I'm thinking a third party that really sees, "I can make a lot of money with this way more than I do in my day job, and I've perfected it." That's question one. And if so, are you leveraging that person and their tactics for peer-to-peer education?

Yes. So it's sort of yes and no. So we had a lot of early adopters 8 years ago who had mostly a bad experience because they could not get reimbursed, okay? Those, for the most part, have been slower to come back around, although we're beginning to see some orders come through, which is nice. Most of the early adopters are the small clinics that I'm seeing. They're super excited about the technology. And frankly, they're excited about the money. The challenge is the smaller the clinic, the less capacity of the owner who's probably the salesman and the top clinician, and do they also have the experience and ability to really generate a lot of referrals from the clinic. And so of our most excited people or COEs, they tend to be smaller facilities that are not ordering a whole lot of MyoPros. I think as they get larger and more clinically deliberate and more comfortable with expensive products like ours and comfortable with sort of the weight gain, like this is going to take time. Even some of the nationals, let's deliver a lot, let's track their clinical outcomes, kind of their own internal tracking, make sure they're comfortable with clinical outcomes. So I think the regional and larger players that are potentially a little more sophisticated on average are being slow and deliberate about the process.

Can you maybe just speak to -- in the last couple of quarters, those kind of 20 that you do have ordering on their own, 15 being from that large provider you mentioned, can you speak to any sort of ramp kind of in their volumes or how they've initially onboarded, that too maybe?

So I will say orders are coming in from many that are not certified yet. So kind of the certification process is built around orders coming in. So when I look at the orders that we've received Q2 to date, I see a lot of company names that I don't know because they're new to the process, they're bringing in all patients and were beginning to order. So I don't know that the order will change a lot once they're fully certified than when they're not. It's just we don't have to show up and help them kind of thing. I think for the large companies that were not aggressive in the past, and I'm just thinking of one, they felt like they would double the units this year versus last year. I think that's separate from certification. I think that's an existing O&P [ 2-week ] provider. I think that has more to do with Medicare. Now what's hurting the COEs is the same thing that's hurting us. Medicare Advantage plans are not covering it like they used to. So to double this year, it doesn't show significant commitment or significant growth, but it does show commitment and growth.

Are they able to be fairly selective with patients?

The particular provider I'm talking about is very clinically deliberate as well. And we really encourage them to be clinically deliberate. And we have tough conversations sometimes with a clinician and business owner and patient about whether or not everyone should move forward. Thank you.

Welcome. My name is Malcolm Bock. I'm the VP of Engineering and Product Strategy here at Myomo. I joined the company in 2023. So I've been with the team for about 2 years. When I joined the team, we had a pretty small group. It was about 8 engineers, more in line with a start-up than actually a full medical device company. So one of the things that I came onboard with is to come and grow the group and build our capability moving forward. So I come to Myomo with 30 years' experience in electromechanical medical device product development across small start-ups as well as medium and large medical companies, including Respiratory Motion, Bionik Labs, Covidien, which is now part of Medtronic. I span like the full range from diagnostic to monitoring, therapeutic and just general medical products. I specialize in building like strong cross-functional teams in the development of medical products. At Myomo, it's actually a very challenging environment because exoskeleton base -- brace includes many different technologies, from software to hardware to clinical integration. We're doing cloud-based, doing -- so sensing technologies, and they all have to come together to meet the clinical need. So one of the key aspects when I came to the team was really to develop at Myomo a cross-functional team that works together. And one of my responsibilities as the VP of Product Strategy is really to manage 3 groups, and that includes product management, project management and engineering. And as part of the engineering, I grew out the team and developed a systems engineering team as well as a mechanical team. So I was trying to build the foundation that the company can work on moving forward. And then I have a track record of innovation with 52 patents, 33 that have been issued and 19 that are pending. So here's an overview of our product road map. It's sort of a history plus sort of where we're going in the future. So if you can see at the top, you have the MyoPro 1, 2, 2+ and the recently launched 2x platform, and then the MyoPro 3, which we're in active development at this time. And then the enabling technology, which is really the MARK unit, which you saw a demo of today. And that really allows our clinicians to do an evaluation of the user to see if they're going to be successful with the MyoPro. And then we have the enabling technologies that consist of the laptop, which is going to move to be more of a mobile app configuration. And then you have the remote measurement kit and some training games that we have as part of the platform. And at the top, I sort of slipped in the sort of where the resource were at Myomo when I joined the team. So it was around 10 people for cross-functional product development, and we grew last year to 23, and now we're at 42. And that supports all aspects of product development, including manufacturing engineers, quality, all product management, project management and all the engineering functions. One thing that we grew out as part of the past 3 years is really most of the staff was mechanically engineer -- mechanical engineers. And so we've grown the systems team, including electrical, software and system integration. So it's been a really interesting journey the past 2 years just building out the team. And I feel very confident moving forward with the group that I have. So you've heard about this. We launched the MARK2 device in January of 2025. This was the first time that Myomo has actually manufactured this product in-house. So when we launched the product in January of this year in Burlington, it was really a testament to Colin and his team's efforts but also the whole project team to be able to get that to market. We've been asked to do a lot of things at Myomo over the past 2 years. And usually, any one of those things would be difficult, but we've been able to grow volumes, move manufacturing facilities and launch new products all at the same time. So in addition to the 3D printed shells, we also provided a one-size-fits-all solution with a more user-friendly -- adjustable for changing the sizes, and as I said, we now make it in Burlington. So the next project that we launched just recently in April is really our -- is really what most of the work has been done over the past year, 1.5 years around MyoPro 2x. So we really -- the improvements that we put in were sort of key to making the product more usable, more comfortable, more easy to don. One of the challenges of this platform, it is about the technology but it's also about meeting the users where they are and being able to provide that solution so that the clinician and the whole clinical team that works to drive the product, that drive the successes, that the product is there to help them be successful. So we also improved the forearm and humeral shell design for ease of donning. We provided a better, more reliable sensor suspension system, which helped people use the device, and we incorporated sort of a poka-yoke, easy step-by-step procedure for putting on the product. So here's a training video that is only 80 seconds that will give you an idea of what the MyoPro 2x is. [Presentation]

So next, we'll talk about the MyoPro companion app. So this will serve as a key communication platform for the future. So at the top of it is really -- it's a way of reducing the COGS, leveraging the patient's existing mobile device as opposed to supplying a new laptop with each device delivery. It also, though, will provide better reliability and really get us away from providing a laptop with each user because this is a very -- I mean, this patient population really needs an easy, more friendly communication tool. And a laptop, it's bulky, it's difficult to deal with. This patient population, even though they're older, they're much more -- it's much easier for them to use a mobile phone than it is a laptop. And then we're going to price ease of use and easier accessibility and reliable and consistent data access. So having the app on the phone will allow us easier access to the data from the device. And then it's really a platform for future features launches to support device adoption and functional outcomes. So you can see just some early visual images of possible screens that we'll be launching with the MyoPro companion app. And just a quick review of our main competition. So -- and this competition is mainly in Germany. And what we say is it's slimmer but more limited in the industrial market. And this is the Vincent Systems' neo1. So the product does have some key advantages, and it has a much sleeker look. It's lighter, but it also has a smaller motor and a smaller battery. It has adjustable buckles that add a more modern look and ease of use and its simplified hand-donning, finger piece can be donned independently. So there's some unique features incorporated in the Vincent Systems that have advantages. On the other hand, the MyoPro brings unique advantages itself with a more powerful and customizable -- for broader market adoption and greater functionality. So that's -- with that higher torque, we're able to handle a larger breadth of patients and both higher-tone patients as well as larger builds and really being able to do tasks where you need to lift bigger things. We're also individual -- we can individually configure the sensor in a specific location, which the Vincent system does not. And we also provide EMG visualization through our GUI interface on the laptop. And then we do provide wrist location that allows rotation of the wrist and allows for locking that wrist in place where the Vincent Systems does not. So now moving forward, our big effort right now, as we've launched the last 2 products, we're putting most of our energies into the companion app and the MyoPro 3. And really, the key objective is to continue to maximize the patient outcomes and specifically around function. So as you saw many videos even today that show that there's -- each patient has unique challenges, and we need to provide that next-generation device that meets those patients where they are and moves them forward to get better functional outcomes. So where are we going to get those? The whole idea is to still maintain a focus on donnability, so provide intuitive design with more comfortable cuff materials; reliability, to increase the patient utilization and satisfaction with reliable, consistent, predictable and smoother device movements; and functional activities, improved grasp design, will be optimized for meaningful patient and support validated outcome studies; and our competitive edge. We are going to go more into data. And right now, we don't really have total access of all the data that's generated on the MyoPro. In the future, we want to take more advantage. We have a unique advantage in that we're with the patient on a weekly basis and we have access to the data, and we want to learn and make a better product. So here's a sort of very simplistic view of the MyoPro and our key technologies. So this has been simplified some, not to give away any secrets, but essentially, what this says is we're going after all of the elements of the MyoPro. So it's not going to be a 2x or a 2z and a 2z+, it's a MyoPro 3. So we're going to tackle every part of the product, and we're not going to leverage electronics from the past, but we're going to bring in new technology and new efforts. And as Kathy said in her presentation, we partner directly with all of the clinical key stakeholders at Myomo. And one of the biggest benefits working at Myomo is that you have these very deep knowledgeable people that are in the field, and they can provide that clear direction and understanding on what are the challenges out there and how we can work together to resolve them. So the MyoPro 3 is expected to provide the -- obviously provide competitive edge, provide a platform technology to support future new product releases and enhancements, designed for subjective and objective tests. So we want to be able to provide a product that will surpass the expectations for functional activities, both for the end user and as well in clinical outcome studies. And then from a reliability point of view, we want to provide monitoring and state-of-the-art technology base and be able to monitor the reliability. And then from donnability, we want to leverage the latest technology in brace design and AI to enable real-time device customization. That's it.

Any questions for Malcolm? Or -- I think right there.

I'm curious -- I know you mentioned [indiscernible] pipeline that you see, whether it's [indiscernible].

That's a good question. As part of the MyoPro 3 development effort and as you launch new products, you're always looking at upcoming patents. There is not that much activity in patent landscape in this category. There has been a little bit, but Myomo has the most patents around this technology. So I don't want to get into too detail but it's -- of all the different categories that I've been on, this is still relatively nascent in its patent coverage.

One more. Is there a time line roughly from when you expect the Myo 3 to be...

Not at this time.

Malcolm, thank you again for your presentation. One question. If you had 100 stroke victims, people recovering and living with the impact the stroke has had on them, and they were given the option of being fitted with a neo1 Vincent or your product -- everyone is different. So if you had a very sophisticated CPO, do you have a sense for what percentage of patients the neo1 would be the more appropriate device for them given what they're living with and their abilities versus people potentially getting a MyoPro?

I'm probably not the best to answer that question, but I think the summary that I put out -- the slide that I put out pretty much represented sort of the strengths of the product and the weaknesses. And I think for the patient population that Myomo is trying to beat, I think the MyoPro is superior.

I think one of the earlier presenters today mentioned that when you're screening patients, a whole bunch drop out of the eligibility category because their issue is hand, not complete arm. And I was wondering if articulation and control of fingers so that we're talking about finer motor control is something that would be on the horizon in terms of your road map. Or are there technical issues that make that infeasible?

Yes, I won't get into the details, but the goal is to provide better functional outcomes. And grasp is a key functional outcome for the product.

Is there any percentage of the current target population that's not eligible for the MyoPro because of limitations in the current technology? And will that -- is there any potential to address that and increase that population by further future additions to the MyoPro?

Yes. I mean it's the same basic answer. We do see an opportunity in the MyoPro 3 to do better on functional outcomes and across the board. So inherently, that will support a bigger population.

All right. Thank you. So my name is Dave Henry. Many of you know me. I'm the CFO of the company. You may not know a whole lot about me. Just in terms of background, I joined the company in 2019. Prior to Myomo, I was CFO of a company, U.S. -- Eos Energy Storage. They made batteries to support solar arrays. So it's an energy storage company. They went public after I left, so sort of pre their SPAC public offering. Prior to that, I was 10 years at American Superconductor Corporation as their CFO over in Devens. That was products for the power grid and alternative energy, primarily wind. And then AMI Semiconductor company, which is a semiconductor manufacturer, I was 3 years their CFO there. And prior to AMI, I spent a couple of decades in the semiconductor industry. So I have a lot of technology background, a lot of background helping smaller companies raise capital and really enjoy my time so far at Myomo. I've got pretty much a very broad background when it comes to finance. If you can do it in finance, I've done a lot of it, all the way from controllership to financial analysis to internal audit. So lots of things that I've done, and there's a lot of knowledge that I'm able to impart as we go. My education, I was Bachelor's from UC Berkeley and with an MBA from Santa Clara University. So sad to see the Pac-12 go away, but now we're in the ACC, and we'll see what happens from there. So just a bit of a historical snapshot of our financials. We were $9.8 million of revenue in the first quarter. First quarters are typically the seasonally low quarter because we're not advertising as much in the fourth quarter because of competition from advertising. That's a large reason. So those first quarter revenue results were largely in line with what we typically see in seasonality. Gross margin was 67 -- a little over 67% in the first quarter. And again, the drivers of gross margin are going to be what the ASP is. And then also, when you look specifically at first quarter, there were some fixed costs that we added this space. We moved into this space here in January. And so we're -- the volumes need to grow so that we can absorb some of the incremental fixed costs that are hitting gross margin, but we do expect that we will be absorbing more of those costs over time. As Colin mentioned, 250-unit capacity per month is what we think we can do. And you don't -- this is a very low CapEx business. So you saw the operation over there. Not a lot of capital equipment that has to be invested, so there's opportunity to really leverage and get incremental operating leverage from higher gross margin. Operating expenses were about $10.2 million in the first quarter. That was on purpose because we said we were going to take the proceeds from the offering that we did in January, invest in R&D, invest in more advertising to grow the direct billing channel because that's what we control as compared to the O&P channel, which we think is a great growth opportunity, but it's something that -- they've got to go through their training. They've got to build up their pipelines. That's just going to take time to do. So to get to where we wanted to go, we said we're going to take some of the proceeds and invest those in the direct billing channel and get ourselves to a higher jumping point for 2026 and beyond. Pipeline adds were a record in the first quarter. You can see they've been growing continuously. We continue to invest, as I mentioned, in the direct billing channel to grow the pipeline adds. The backlog was at 249 patients. One of the things that you're seeing with Medicare coverage is there is a greater velocity of patients that move through our process. So that means that you don't -- they might enter the pipeline, they might then leave the pipeline, enter the backlog and then leave the backlog. Oftentimes now, we're getting a larger number of patients that are entering the backlog and then leaving the backlog in the same quarter. We call those fill units. In the last couple of quarters now, we've had about more than 80 fill units in each quarter. And that was significantly higher than what it had been in the past. We would expect that continue as we go forward, certainly as we try to grow the number of patients that we're serving that have Medicare Part B. This is new disclosure that we're required to do with segment reporting, so I thought -- some of you might not see it so I'll show you now that -- what are the components of our operating expenses? So 52% of our operating expenses, this was first quarter, so the $10.2 million I talked about, 52% were payroll and benefits, 16% was advertising. Then those 2 combined, 68% of our first quarter operating expenses were those 2 things. And then the next largest things are travel. A lot of that is driven by the regional orthotists that are out in the field visiting patients. And then 7%, which was -- I believe that was consulting. So again, 68% of first quarter revenue was operating expenses -- or 68% of operating expenses were advertising and payroll. And then looking at the components of cost of goods sold. So on a percentage basis, 26% of COGS in the first quarter was material and then 74% was everything else, labor and overhead. You can see the components there, payroll and benefits being the largest component of that other amount of overhead. Everything is fixed as it is right now, and then as we -- Colin mentioned, you add labor, there'll be incremental direct labor that would go along with that. But the contribution margin is still very good for both -- for our product. In terms of cash, we had -- we burned $2.7 million in the first quarter. Again, that was purposeful because we are investing the proceeds from the offering, growing the advertising, growing the direct billing channel, investing in R&D. And as we mentioned in our guidance back in May, we said that the second quarter would be the largest operating cash burn quarter. That is because we paid -- we had a very good year in 2024. So we paid all the employees' incentive bonuses. And then there's also a higher second quarter expected operating loss, as we said, because of the fact that the revenue will be -- is not sequentially higher in the second quarter, as we said. And so that means a greater operating loss as we continue to invest. And so those are the reasons why we expect to see a higher operating cash flow in the second quarter. We had $21.5 million of cash at the end of the first quarter. And we also have a facility with Silicon Valley Bank. That consists of 2 things. There is a $4 million line of credit, up to $4 million. As of most recently, about $1.9 million of that was available. We also have a $3 million term loan facility that's available at any time. Both of those facilities are undrawn. This facility expires in February of 2026. And we have until then if we want to take any advances on the term loan facility. Otherwise, we'll need to re-up the facility with the bank. So we've talked about our long-term model. You've heard about the -- what we want to do in the O&P channel, up to $20 million by 2028. We want to get to around $15 million in our international business. Overall, we're trying to get to $100 million. A lot of you have heard that before, but you haven't -- we haven't put a date on it. We're putting a date on it today, and we're trying to get there by 2028. And we've tried to give guidance -- well, our target, I should say, our aspiration, however you want to call it, we've tried to give that in a -- something that we think is reasonable to achieve. For example, you saw Micah's sensitivity on the O&P channel. So there's opportunity there to grow that. Now out in 2028, we don't know what's going to happen. The Medicare Advantage rates could -- the authorization rates could continue to go down. We don't know. But we've tried to balance things off with upsides and downsides factored in, and we believe that this $100 million is something that we can achieve and try to get there by 2028. Now what are some of the other elements of that operating model? Gross margin is 70% to -- we expect to be in the range of 70% to 72%. What could affect that range? How much will the O&P channel grow? If the O&P channel is greater than $20 million, and as we look out into 2028, the gross margin could be lower as a result of that because the ASP for the O&P channel is going to be roughly -- a rough approximation, half of what it is in direct billing. So as that channel grows, our ASP, our blended ASP will decrease, our gross margin will decrease. But on the flip side, there's not as much investment in operating expenses, advertising and other people that might support the direct billing business because we're just a manufacturer delivering a product. And the expenses kind of stop at cost of goods sold. And so EBITDA margin is expected to be in the range of 15% to 20%. The factors that will affect that, again, the gross margin, what's the mix going to look like, and also how much advertising might be spending out in that time compared to what our plans were to generate the volume we need for the direct billing channel to hit our objective. And then based on what we're thinking right now and what our forecasts are, we believe that the cash flow breakeven point -- remember, we were cash flow positive fourth quarter a year ago. We invested more to grow the direct billing channel. So that increased our breakeven point. We think that new cash flow breakeven point is around $17 million to $18 million of quarterly revenue. So then what does that look like by channel? So obviously, it could be very -- there could be a wide distribution of things that could happen. But this is what our best guess is right now is what we think that model might look like. So in first quarter, 79% of our revenue was direct billing, 13% was international, and 5% was the U.S. O&P channel and then the rest was VA. When we look out to that -- to 2028 and what the constituents of $100 million of revenue might look like, our view is that about 62% would be the direct billing channel in that model, 20% would come from the U.S. O&P channel, 15% from international with the remainder coming from VA. So our end state, our desired end state is to see the O&P channel grow. We're limiting our growth in operating expenses. As a result, the contribution margin between the 2 channels at any given point in time is generally comparable. But if we can grow the O&P channel, I think that would be our preference at the present time. But that could change as circumstances change. So again, this is a -- there's a lot of variability here, but we wanted to give you a sense of what we were thinking about in terms of what this looks like. And to also communicate that there is a -- it's not a -- it's an aspiration, yes, and it's not something that we pulled out of the sky, right? There's a lot of thought that is going behind this in terms of our modeling, in terms of our -- what we think the direct billing channel could grow to be, what we think the O&P channel could grow to be. And so we've -- there's a lot of thought that goes into this. And we're making this projection. It's not because we're hoping that we can get there. It's because we think we have a plan to get there. So how do we achieve those targets? We're going to continue the direct billing efforts. Approximately 25% annual revenue growth would be -- is sort of embedded into that model. That assumes that there's modest improvement in some of the conversion rates that we see. Some of those conversion rates, we've talked about those in the past. There's a number of conversion rates we're looking at, leads to pipeline adds, pipeline adds to authorations submitted, authorations submitted to what ultimately gets delivered. So there's a lot of conversion rates that go through that process. But we're only assuming modest improvement as we go, and we're always thinking about ways that we can improve those conversion rates. As I mentioned, the U.S. O&P channel, that is a large growth driver. And we think that's a middle of the fairway kind of estimate. I think there's upside potential there. You talk to people internally. I think that people that are out there in the field, they would say that. But we're trying to come up with a model that we think is realistic, and it is achievable, and can survive events that I know are going to happen at some point. I just don't know what those events are. Continuing to grow international revenue. As you saw from that chart that John showed earlier, his growth rate is actually expected to be -- it's a compound 38% growth rate from 2024 to 2028. But prior to that, it was 52%. So it's a reasonable expectation that we're putting for that business to continue to grow as they've been growing. And if they continue to grow as they've been growing, there might be a little bit of upside to that number. Modest manufacturing cost reductions are assumed. You heard earlier from Colin that we're targeting about 200 basis points of quarterly gross margin improvement by the fourth quarter of 2026. Some of the key drivers of that are going to be that companion app because that eliminates the laptop, which is about $600 or so of cost of goods sold in the device. There's other things that Colin is working on as well. There's -- as we grow our volumes, we would expect that there'd be some material price reductions that would go along the way with higher volumes. And then the fixed cost absorption benefit because we have a physical space we don't need to add on to, to generate those kinds of revenue. So there'll be additional absorption benefit from that as well. Modest R&D growth is assumed. 2025, as we said, is going to be a year of investment in R&D. And after that, we believe that we can sustain our existing products with that investment and deliver on the product road map. As Malcolm showed you earlier, there's a large number of people in this organization, not just his folks but others in the company. 43 people now are supporting in some form or fashion product development. So I think we have the infrastructure in place to deliver on the things that we have in front of us. And we're already showing results from that as we've -- in the last several months, we've introduced the MARK2 and we've introduced the MyoPro 2x. So things are going on, things are happening and things are coming out of product development and moving into the marketplace. And then we will spend the advertising necessary to make sure that, that top of the funnel is full for the direct billing business because that is the part that we do control. And so we will make sure that we spend what we need to spend to make sure that we get there. And our model assumes an increase in advertising spending over the plan horizon. So do what I want you to take away from some of the financial part of this? Our target is to achieve $100 million of revenue by 2028. We think it's -- we've got -- there's plans and there is a lot of thought that has gone into that model. The O&P channel is targeted to be 20% of revenue by 2028. I talked about the breakeven point of $17 million to $18 million of revenue per quarter. We'll spend the advertising dollars necessary to continue growth in the direct billing channel, and we'll reassess that if necessary. If events change, we're not going to just blindly spend at it. But we're always keeping an eye on the effectiveness of the advertising spending and then moderating growth in R&D over the plan horizon. So with that, if there's any -- I'll take any questions you might have.

Vikram Dalmiya at Charlestown Capital. So one question I had is, what is the current cash runway? Do you have enough cash on hand to get to 2028 breakeven?

If we -- there's a lot of things that can happen between now and then. I mean I want to answer your question by not trying to update guidance. But I guess I'll answer the question this way. When we did the capital raise in December of 2024, our intention was for that to be the last raise. Now things can happen, things can change. I'll never say that we won't ever do an equity capital raise again, but it's not our first choice if it ever came to that. That's -- those are our plans. But like I said, I can't tell you that never, never. You just don't know what will happen in the future. But that's our intent is to -- if there is a capital requirement down the road is to look for nondilutive sources first before we think about diluting any further.

Understood. And then the second question I had is based off your Q1 reporting, I was a little confused on the number of units that are on back order. I believe it's 249. So that is -- and the timing of a patient going through from a lead to the pipeline, pipeline to essentially delivery of the product, is that -- is this back order? Essentially, they're through the pipeline. Now they're just waiting for the device to be delivered to them? Or is this in the pipeline phase? How should I think about that?

Yes. So the pipeline -- as we mentioned earlier, the pipeline is everybody that has completed a successful telehealth evaluation. But we don't have an insurance authorization yet or in the case of Medicare, we don't have the medical documents necessary to consider them ready to be delivered. So that's the pipeline. Once we have that information, then it enters into the backlog. And then once they enter the backlog, they're eligible to become revenue units. There's always people that will drop out of the backlog. So even we have everything, but they end up dropping out. Some of the reasons for that you heard earlier. Sometimes the fitting is the first time we see the patient. And we're trying to put -- we're trying to maximize clinical outcomes. We don't want to fit the device on a patient that's not going to use it. And so oftentimes, our CPOs will make a decision in the field to say this patient is not a candidate. They'll go out to the home and they'll take the device back with them because they're just not a good candidate. Maybe they -- that doesn't mean that they'll never be a candidate, but they might be told, go see a therapist and get some more therapy. Try to relieve some of the spasticity you might have because we don't want to hurt you if we put the device on you.

Ultimately, this question is about the right level of investment and also about revenue targets and how they compare to the total addressable market. So my premise is that if you have a first-mover advantage, you want to move fast so that fast followers don't come in and try and take advantage of the market that you've been creating. So I think about the O&M channel -- the O&P channel, pardon me, and the strategy makes sense to focus them on new cases, on incidence cases. It sounds like that's the lowest cost of customer acquisition. But when I think about 2028 and the $20 million target, that's based on 200 centers trained by then and an assumption of 4 units per year. And I'm sorry, I couldn't see the sensitivities from back here because of -- I need a new prescription. But that gets you to 800 units, which translates to that $20 million. 800 units -- I think the number that was shared for incidence cases was 200,000 a year. And even if I lop off half of those, making it 100,000, 800 units is less than 1% market penetration or market share, if you will. So the question is, is that moving fast enough? Should you be investing more to capture more of the market now and grow that channel much faster? Because that certainly leaves a lot of market on the table for others to come in and go after. And I think you want to just grab what you can while you can.

Yes. And there's a lot of factors to consider there, right? Because we want to grow at the pace that we are capable of growing, right? And we're already doing a lot of the things you said. Our R&D expenses are going to double this year, and that's the reason why. Because we are trying to get new products out into the market faster. We know we have a first-mover advantage, and we want to maintain it. And the best way to maintain it is to have the best product out there for whenever somebody might come along. We don't see anybody yet. There is no competition still in the U.S. at the present time, but we're not sitting back. We're continuing to make those investments and to move as fast as we can. Now in terms of plowing a whole bunch of money into advertising and other people -- it's not just advertising when we're growing the direct billing channel. You need people to take the calls. You need people to speak to the insurance companies and arrange to get the medical documents. You need people to file the claims. You need people to deliver the product. So there's a lot of expenses that go along with that. And those expenses don't have an immediate return. So you've got to -- so you have to balance out the cash that you have with the ability to grow.

I was actually talking about spending more to grow the channel faster, but that's an investment that takes for itself over time as opposed to [indiscernible].

Yes. And I think Micah has mentioned it. We are working as diligently as we can to -- there's enough demand. I don't think that we are -- I think we have a right balance between people that are looking to be certified versus the capacity that we have to certify people. So we're not holding people back from becoming MyoPro certified. But there are some things, as Micah mentioned, that they have to do as sort of a prerequisite to be certified. That means they've got to go out and find some patients. And that's an activity that they're not necessarily used to doing. And so they have to do some things as well. So we can invest all we want, but it takes them as well to do those things. And we just don't control the rate at which they do that.

A quick question, Dave. Putting the incentive bonus aside that you mentioned you expect in Q2, do you expect the OpEx to be similar in Q3, Q4, especially if in a quarter like Q4, we see higher revenues?

Yes. I won't -- we're not updating any guidance at this time, so I'll defer on answering that question. So yes, I'll wait to answer that question until a later date.

Just quickly, when you target the $100 million in revenues for 2028, what do you see as the biggest risk to that forecast? It could be reimbursement, Medicare, O&P. Just when you do it, what do you think of as the biggest potential thing?

I think -- I mean, there's -- I don't know if there's one risk that sticks out of my mind. I think there's several of them that could come into play. Will the O&P channel grow as we expect? We don't -- we have some control over that. We can certify them. We can do everything, but they've got to go out and prospect and want to grow their business. And so we don't necessarily control that. What will happen with Medicare Advantage plans in the future? Will they continue to have lower rates of authorization? We don't know. Could those rates go even further lower than 15%? It's a possibility but we don't -- we just -- that's something that's a risk. I don't know how much further down it can go. They're already not complying with what the laws are. We have a device that original Medicare covers. They're not supposed to be denying it and excluding people from getting it. They need to be saying why someone should get it, and they're not doing that. And so -- and as long as they're continuing to allow to do that, we're kind of in this situation we are with them until they decide to want to reimburse more. One good piece of news, I guess, is that I heard earlier this year that the reimbursement rates, so the amounts that the government was going to pay Medicare Advantage providers, was going to be increased for this year. So that's -- hopefully, we'll see if that becomes a benefit. And then you just never know what else might come down the road. But those are the things that are sort of at the top of my mind. All right. So I think we're to the point where -- if I could ask Paul and then Micah and Harry to come on up, grab a mic and -- or if you want to stand or if you want to have a stool. We can -- we'll take a few minutes for questions here. We've got about 15 minutes or so. And some questions in some of these other sections you might not have been able to get to. So let me put this aside here.

Well, before we get started in the Q&A, I just want to say thank you very much for coming here. One of my goals for this when I started out this morning was to listen to you, to learn from your questions and so on. And I hope you saw that we are a learning organization. We're always doing the data analysis. We're doing course corrections. We've done pivots across our history over here, always trying to get better and better. It may not always be a straight line, but directionally, it's up and to the right. Also, I wanted to make sure that you got to see the team we've put in place here. Really good group of people that are leading this company going forward here. So pleased that they were able to join me in this journey. One of the things that I took away from Harvard Business School was to hire people smarter than yourself. That's pretty easy. So I'm really glad that we've got the team that you've seen here, plus all the other 200 people that are in the company, that are really professional, whether it's people you saw on the production floor making high-quality devices, all the people that are in the field traveling to do patient care, the follow-up care and so on, just a terrific team of people. So I really want to thank all of you for being part of this team here, and we're ready for your questions.

I'll just get started here. I imagine at Harvard Business School, they spoke a lot about scale, which every small company ultimately uses to become a large company, which typically at some point in time is accelerated with M&A. How do you think about Myomo from the standpoint of either acquiring assets to leverage your scale or being the acquiree to allow someone else to leverage their scale?

So there are a lot of interesting technologies, start-up companies that are coming up with products. I'm looking at -- I'm actually having lunch with 1 fellow tomorrow. I think on this is, I'd like to be the acquirer from a real position of strength. When I look at -- I want to have strong revenues, strong profitability, good balance sheet and also have enough bandwidth of our executive team to do the due diligence because to be able to go in -- right now, as you can see, we are so busy growing the business. If I ask these folks to, hey, go spend 2, 3 weeks digging deep into the IP and the technology and the operations and the compliance and the regulatory and so on, we'd get distracted from our current business. And we've got so much to do, as was pointed out here. We're still at the early stage of market penetration here. So I want to make sure that we're just doing that. At some point, we can create a more formal business development process. But we are certainly an interesting company for a company -- smaller start-ups that have got interesting products saying to us, gee, I've got something else for stroke patients. I've got something else for spinal cord. So we are looking at those, kind of staying in touch. And somewhere down the road, there might be some combination. And look, we're a growing, attractive company. We're the biggest, I'll call it, white space in the orthotics and prosthetics industry. This industry grows maybe 1% to 3% a year overall. If you look at one of the companies -- some other public companies report their results. We've got the biggest opportunity. So yes, that may be attractive to someone in the future. But right now, we got to focus on building this business. Anything from our remote audience?

Just a quick one. You've got ambitious growth goals in Germany, which sounds -- there's a good reason for that. Besides Germany, are there any other European countries that have as favorable or something resembling Germany in terms of a promising environment to get approvals and sales?

Yes. I mean all these countries have stroke survivors who could benefit from our products. John Frijters and I, we've looked at -- the Scandinavian countries are probably the best. They're not the largest, but they've got very good reimbursement. Having North Sea oil helps. So that could be a next target. We've looked at France, U.K., Italy and some other major markets. It requires a multiyear investment. When John Frijters joined us in 2020, it took a couple of years of working with initial insurance companies, developing an O&P network and so on. And so at this point, I'd rather do what's working, which is scale Germany faster versus hiring a couple of people to try to open up France or Italy or try to get the NHS to cover this in Europe. So right now, it's prioritizing what we get the biggest ROI on the next euro we spend. Chase?

Just to go back to competition for a second. Anything you're watching that is kind of new outside of the competitor you mentioned today? And then on your IP, is there anything that you think can potentially prevent competitive entrants within your IP portfolio in the U.S. market?

So I mean we're always looking at, okay, who's out there? As Malcolm pointed out, there are a couple of small German companies. Of course, they are the big players in orthotics and prosthetics. Clearly, this is an attractive market. Whether or not they will enter at some point, we kind of expect that will happen. But as Malcolm pointed out, we have some very strong blocking patents. We've got a total of 30-some patents that cover multi-joint myoelectric orthotic devices. So unless someone can engineer their way around it, and that happens in medical devices, but we're certainly going to defend our territory here as the leader in myoelectric orthotics.

Is there anything new that you're specifically aware of? Or is it still just kind of the risk of eventually those larger competitors potentially?

We go to all the trade shows in Germany. We're going to be at AOPA, which is the big national O&P show coming up in just 2.5 months. If anybody is interested in entering the space or trying to recruit the channel, they'll start displaying their wares. So we'll see if we see anything on the floor in AOPA in Orlando in September. And you're all welcome to come down. I know a number of you did last year. You get to meet our team, get to meet some of the O&P partners. And just to mention about the O&P partners. So I went out to Minneapolis to the Craig-Hallum conference last month, went a day early, went to see [indiscernible], which is one of our new COE partners that are in the process. They've got 6 locations across Minnesota. Met with their owners. Next week, I'm going down to Fairfax, Virginia to go through one of these evaluation days. As Micah said, there's a process that they go through. They're going to have a number of patients to evaluate. So I'm getting out there to cheerlead and get these O&P providers excited because it is a huge opportunity for them. But as you heard in the videos, they've got to devote the resources to make this happen, and we certainly want to support them.

There's been a lot of good content today, and I'm just going to connect kind of a bunch of dots to make sure I'm thinking about something correctly. So you kind of have given the cost per lead in April. Things have clearly normalized. We've kind of talked about how those lead qualities remain strong, at least from what we've seen. We talked about those long-term targets where it's clear that, that kind of gain is coming from kind of increased activity and not from improvement in the conversion metrics, right? So we're putting more people into the pipeline, et cetera. I mean it seems like it's fair to -- with maybe a 2- to 4-week delay, that pipeline adds should kind of normalize from that impact. Is that a fair assumption for me to make? Or is there something else I should be considering as far as that recovery in pipeline adds in the near to midterm?

I think the recovery -- I mean, I guess, if we're calling the recovery from not hitting our objective...

Cost per pipeline add.

Okay, cost per pipeline add. So as you spend more on advertising, I think there's a natural math that occurs that you -- and given the timing of cycle time that Micah mentioned earlier, that you don't see an immediate sort of -- you can see a short-term increase before it comes down because more leads come into the process and become pipeline adds after the initial contact. So you could see that some kind of phenomenon like that. But overall, even if the pipeline add, cost per pipeline add grew in -- over where it was in first quarter, it's still a very attractive thing to continue to spend on advertising. It's still a pretty low customer acquisition cost. When you yield that all the way down from a cost to pipeline add to actually spreading all the advertising dollars over the cost of a revenue unit, you're still talking about a very good incremental contribution margin. So it's an activity that should continue regardless of what we end up reporting on cost per pipeline add.

I'll add on briefly, Chase. Remember the way we measure advertising cost per pipeline add, it's the advertising spend during that period and the pipeline adds during that period. When we also separate from what we publish, we look at not only with pipeline adds, but other metrics, we call it cohort. So sort of the leads that came in during a period and what happened to those leads over long periods of time. So the equation is a little complex. As Dave mentioned, cycle time is a component of the equation.

Just a follow-up to that cohort point, have you noticed over the last year there's been a distinguishing factor between cohorts? Are they generally consistent as far as time lines, lead conversions go?

Other than what Dr. Kovelman shared as far as insurance company behaviors, right, so we've seen those change, which kind of -- so on the back end of the process. On the front end of the process, we're not seeing any significant changes that are unexpected to the cohort.

M&A was mentioned earlier. I was wondering about partnerships. Have you thought about whether there are any natural partner -- and this relates to the scale question, whether there are any organizations which are potential natural partners that could expand your reach and whether there's enough money, there's enough meat on the bone for both of you to be happy in kind of a setup like that?

Well, a couple of things. So we have our joint venture in China because there's 14 million paralyzed arms in China. So we will generate license fees as that venture starts to become commercialized. I've got a patent for Japan. There's 1.2 million stroke survivors in Japan. I've had some efforts in the past to try to find a local partner in Japan that would want to bring this technology to them. And in all these international markets, the big question is always, will it be reimbursed? So we have to find a partner that is going to be willing to make that reimbursement investment like we have here in the U.S., like we have in Germany to be able to scale that business. So it's really a question of finding the right partner that has the long-term vision that says, look, this is a market that's going to grow for a very long time. And so putting a couple of million dollars upfront a couple of years to create a reimbursement category like we did in the U.S. is really ultimately going to pay off. So we have conversations. AOPA is always a good place to have those type of discussions. I'm going to OTWorld, which is the big orthotics and prosthetics conference in Germany in May. We'll be there again to have these discussions. And I hope that I can find the right partner that wants to take these to other markets.

Since you mentioned China, what's the update on the clinical trial in China? And once you have data, how long do you think until they can get approval there?

Well, they tell us it's underway. And their best estimate right now, [ Norbert ], is that they could start generating some revenue by the end of the year. That's kind of the current status from our last Board meeting we had with our Chinese partners. All right. Well, hearing no more questions. Again, thank you very much for coming. Please stay in touch, follow up with us. And also, we'll have this webcast, which is recorded, available to yourselves, also to colleagues who might not have been here in person. Have a good trip home, everyone. Thanks.