Myomo is a wearable-robotics franchise whose second quarter tests whether a mid-year commercial pivot can turn a Medicare-concentrated arm brace into a cash-light growth story. Last year Facebook targeting rules and Medicare Advantage denials inflated the cost of finding patients through social ads. Management answered with MyoConnect, a field program that sources candidates from rehab hospitals and clinics rather than from paid media. Recurring referral sources already produced 53% of quarterly sales, six months ahead of the internal plan, and revenue still rose 21%.
That mix shift is the operating debate. Direct billing still dominates collections, yet United States orthotics partners more than doubled and Germany keeps converting Social Court wins into insurer coverage. Gross margin expanded because a new mobile app dropped the laptop that used to ship with every brace and because Burlington assembly is pulling labor out of each unit. Operating costs barely moved, so most of the volume gain fell through to a much smaller adjusted-earnings hole. The offset sits below the operating line. Avenue Capital's November term loan now charges interest and marks a conversion feature through earnings whenever the share price moves.
Cash and short-term investments ended mid-year at $13.5 million after the first half consumed $4.1 million in operations. Management raised full-year sales guidance and told investors second-half cash use stays under $2 million. The equity capitalizes at roughly $59 million on the September close, or about 1.3 times trailing sales. The open question is whether referral volume keeps compounding without another advertising binge, and whether Avenue's cash and revenue covenants stay quiet while the company still loses money.