Myomo Q3 2026 Earnings Call Transcript

Myomo (AMEX:MYO) reported third-quarter financial results on Monday. The transcript from the company’s third-quarter earnings call has been provided below.

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Summary

Myomo reported a record revenue of $12.3 million for Q3 2026, a 22% increase from the previous year, with a gross margin improvement to 71.3%.

Key strategic initiatives included the expansion of the Myo Connect program, which significantly increased referral sources from rehabilitation facilities, contributing to 54% of the revenue.

The company entered agreements with payers covering an additional 35 million lives, aiming to improve market access and authorization rates for their products.

Myomo aims to grow revenues at twice the rate of operating expenses, evidenced by a 22% revenue growth against a 6% increase in operating expenses.

Product development progressed with 35 subjects enrolled in a clinical trial and ongoing work on the MyoPro 3 and a hand-only device for the German market.

The company narrowed its full-year guidance to $46-47 million, maintaining a positive outlook on financial and operational objectives for 2026, with plans to continue leveraging growth in 2027.

The company reported a net loss of $4.2 million for Q3 2026, attributed partly to a non-cash charge related to derivative liabilities.

Myomo emphasized its strategy to enhance market penetration through new hires and strategic partnerships, particularly in the U.S. and Germany.

Full Transcript

OPERATOR

Good day and welcome to the Myomo third quarter 2026 financial results conference call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today’s presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on your telephone keypad. To withdraw your question, please press star then two. Please note this event is being recorded.

I would now like to turn the conference over to Vivian Cervantes, Investor Relations. Please go ahead.

Vivian Cervantes (Investor Relations)

Thank you, operator, and good afternoon, everyone. This is Vivian Cervantes with Alliance Advisors, IR. Welcome to Myomo’s third quarter 2026 financial results conference call. With me today are Myomo’s Chief Executive Officer, Paul Godones, and Chief Financial Officer, Dave Henry. Before we begin, I’d like to caution listeners that statements made during this call by management other than historical facts are forward-looking statements. The words anticipate, believe, estimate, expect, intend, guidance, outlook, confidence, target, project and other similar expressions are typically used to identify such forward-looking statements. These forward-looking statements are not guarantees of future performance and may involve, and are subject to, risks and 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 filings with the SEC. 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 call, today, November 9th, 2026. It’s now my pleasure to turn the call over to Myomo CEO, Paul Godones. Paul, please go ahead.

Paul Godones (Chief Executive Officer)

Thanks, Vivian. And good afternoon, everyone. Thank you all for joining us today. Myomo’s purpose is to help people living with chronic arm and hand paralysis to regain function and independence with our powered arm braces. In the third quarter, we made progress in reaching more of these patients we serve while improving the economics of our business. Revenue reached a quarterly record of $12.3 million, up 22% from a year ago. Gross margin rose to 71.3% and we delivered approximately breakeven adjusted EBITDA.

These results reflect continued execution on the four success pillars we discussed on our last call, including building recurring patient sources, expanding payer access, demonstrating operating leverage, and investing in product development and clinical research. Let me walk through the progress on each. The first success goal relates to increasing revenue from recurring patient sources. Patients referred from rehab hospitals and stroke clinics, orthotics and prosthetics partners, and the VA represented 54% of third quarter revenue compared with 33% a year ago. This reflects the success of our Myo Connect program, which is now entering its second year. Since its launch, healthcare professionals at more than 500 rehabilitation facilities and therapy centers have referred potential MyoPro patients to us, which is an increase of over 200 locations in the past quarter.

That milestone gives us a broader base of relationships through which patients can learn about the device during their care and enables us to build a more durable business over time versus relying solely on direct-to-patient marketing. We see a growing number of physicians and therapists recommending a MyoPro for their patients, and we expect a larger number of referrals per facility as they see the benefits of the MyoPro for their patients. We’re already seeing this same-store sales growth.

Over 30% of our recent referrals came from the existing sites with therapists and physicians that know our company, the product line, the clinical research that’s been published, and their patients’ good outcomes with the MyoPro. Increases in referring patients contributed to the record number of orders in the quarter, which came in at 258 in the third quarter. Our success pillar number two is to increase market access so that more qualified patients can obtain a MyoPro. During the quarter, we’ve either entered into agreements or are in the process of finalizing agreements with payers that cover an additional 35 million lives. For the payers with contracts that have been completed, we’re in the process of going live as an in-network provider, and these agreements include the payer’s Medicare Advantage and commercial plans.

We also made progress with state Medicaid agencies, and we are now enrolled with seven states such as Pennsylvania, Michigan, and Wisconsin. We have other state Medicaid plans in the queue. This will help us with patients that have Medicaid in these states subject to individual medical coverage policies, plus the ability to receive secondary insurance payments for our Medicare patients who may reside in these states. Our plan is to continue to enter into more such contracts given our track record of a higher preauthorization rate for the MyoPro when we are an in-network provider.

Our third success pillar is generating operating leverage. Our target is to grow revenues at least twice as fast as operating expenses. We achieved that goal again in the third quarter as revenue grew 22% year over year while operating expenses grew just 6%. In addition, gross margin improved by 750 basis points in the third quarter compared with the prior year. We are continuing our path to profitability and sustainable positive cash flow by working on additional cost savings, such as the insourcing of 3D printing of the custom-fabricated shells for each MyoPro, which should go online by the end of this year.

Our efficiency efforts in the other functional areas are also making a financial impact, with our overall volumes up while our headcount is down over the past two years. Our fourth success pillar is continued progress with product development and clinical research. The randomized controlled trial at the University of Utah continues to make steady progress, with 35 of the planned 50 subjects now enrolled, up from 25 at the time of our second quarter call. Development work also continued on the MyoPro 3 and on the hand-only product for the German market. These efforts are a part of our longer-term work to expand the evidence base and the applications of our wearable robotics platform.

We’ll provide further updates as milestones are reached. In summary, the quarter showed how executing across our four pillars of success reinforce each other. More referral relationships and payer access help drive record orders and revenue. Higher volume and cost reduction support a stronger gross margin and improved operating performance. We are building on our market-leading position by investing in the clinical, commercial, and product capabilities needed to serve more patients. To continue scaling our commercial operations, last month we announced that Katie McClure has joined Myomo as our new Chief Commercial Officer.

She has a successful track record of growing revenues, establishing strong referral partnerships, and leading a sales and field clinical team from her experience at fast-growing Inspire Medical and other medical device companies. I’m pleased to have her bring this experience to Myomo as we execute our plan to further address this large unmet need of chronic arm paralysis in the country. With that overview, I’ll turn the call over to Dave Henry to review our financial results in greater detail.

Dave Henry (Chief Financial Officer)

Thank you, Paul, and good afternoon, everyone. Our revenue for the third quarter of 2026 was a record $12.3 million, up 22% versus the prior-year period. The increase was driven by both a higher average selling price, or ASP, and a higher number of revenue units. ASP for the quarter was approximately $55,500, about 2% versus the prior year. And we recognized revenue on our record 222 MyoPro units, an increase of 19% over the third quarter of 2025.

Looking at payer mix, Medicare Part B patients represented 54% of both third-quarter revenue and prior-year period revenue. Medicare Advantage plans represented 17% of third-quarter revenue compared with 18% in the second quarter of 2025. Our transition toward recurring patient sources continued to accelerate during the quarter. Recurring patient sources represented 54% of third-quarter revenue compared with 33% in the prior-year quarter. Within those recurring channels, 27% of total revenue was generated by direct billing referrals through our MYO Connect program, up from 23% in the second quarter and 20% in the first quarter of 2026.

We continued to see strong results from our other recurring channels, international revenue representing 17% of revenue and U.S. O&P revenue representing 8% of revenue. VA patients represented 2% of revenue in the third quarter. Turning to our metrics, we received a record 258 MyoPro orders during the quarter, up 13% year over year. We added 600 patients to the pipeline during the quarter, down compared with the second quarter of 2026. MYO Connect referrals represented 18% of pipeline adds in the third quarter. Third-quarter MYO Connect pipeline adds were influenced by seasonality in the third quarter from summer vacations among referring sources as well as temporary internal staffing constraints.

Staffing constraints have been alleviated entering the fourth quarter. Our direct-to-patient advertising spending was up 2% year over year. Advertising-driven pipeline adds in the quarter were impacted by an inefficiency in our lead generation, which resulted in fewer workable leads and a lower conversion rate among those generated in the quarter. We continuously test new methodologies for patient targeting in order to maximize spend effectiveness and optimize customer acquisition cost.

With the aforementioned MYO Connect resource constraints alleviated and the implementation of improvements in direct-to-patient lead generation, we generated approximately 30% more direct billing pipeline adds in October than the per-month average in the third quarter. We ended the quarter with a backlog of 217 patients, down modestly from the second quarter as the efficiency of our operations turned record orders in the quarter into a record number of revenue units.

Turning to our financial results, gross margin in the third quarter was 71.3%, up from 63.8% in the prior-year quarter. The improvement was driven primarily by the higher ASP, material cost reductions, and the spreading of fixed costs over a higher number of revenue units, partially offset by somewhat higher clinical costs. Operating expenses were $10.5 million, representing an increase of 6% compared with the third quarter of 2025. Higher general and administrative expenses and R&D were tempered by lower sales, clinical, and marketing spending in the quarter.

Operating loss improved significantly to $1.7 million compared with $3.5 million in the prior-year quarter. We achieved adjusted EBITDA breakeven in the third quarter compared with a loss of $2.7 million a year ago. We are keenly focused on operating leverage and minimizing cash burn as we carefully invest in MYO Connect. Note that a portion of the improvement in adjusted EBITDA is due to higher stock-based compensation expense, as certain employee incentive payments were paid in stock during the third quarter.

As part of our cash management initiatives, we expect stock-based compensation expense to return to its typical run-rate in the fourth quarter. Below operating loss, third-quarter results include a non-cash charge of approximately $1.8 million related to a market adjustment to the valuation of our derivative liabilities, as well as cash and non-cash interest expense associated with the Avenue Capital term loan. Including the aforementioned non-cash charge, net loss for the third quarter was $4.2 million, or $0.10 per share, compared with $3.7 million, or $0.09 per share, in the third quarter of 2025.

Turning now to our balance sheet and cash flow, as of September 30, 2026, cash, cash equivalents, and short-term investments totaled $11.9 million. Cash used in operating activities during the third quarter was $1.3 million compared to $1.8 million used during the third quarter of 2025. Cash burn, or the change in cash in the quarter, was $1.5 million, an improvement from $2.2 million in the second quarter. Let me conclude with our outlook. Last quarter we raised our full-year guidance to a range of $45 million to $47 million. We are narrowing that guidance today to $46 million to $47 million. At the upper end of that previous range, we expect that the beneficial effect of manufacturing cost-reduction initiatives will result in a modest sequential increase in gross margin in the fourth quarter. One-time costs associated with the transition of our Chief Commercial Officer and higher headcount in support of our MYO Connect program are expected to result in a modest sequential increase in operating expenses in the fourth quarter.

Despite this expected increase, we are maintaining our previously communicated operating leverage objective to limit the growth of operating expenses in all of 2026 to half the rate of 2026 revenue growth. We continue to expect total cash burn during the second half of the year to be less than $2 million, or less than $500,000 in the fourth quarter. Overall, we’re pleased that we are poised to meet or exceed our financial and operating objectives for 2026, and we look forward to continued execution in 2027.

With that financial overview, I’ll turn the call back to Paul.

Paul Godones (Chief Executive Officer)

Thanks, Dave. Well, to summarize, over the past year we’ve executed on all four of our success pillars to grow Myomo volume and revenues while improving key financial metrics including gross margin, adjusted EBITDA, and cash usage. In September, I attended the American Orthotics and Prosthetics Association National Conference, where we met with new and existing O&P partners to establish a deeper engagement with this channel so that they can have another product included in their treatment plans for their stroke patients.

As an example of how these relationships are working, one of the national providers recently brought our MYO Connect clinicians into one of their hospital referral sources, which resulted in several patients added to their candidate pipeline and the delivery of their first MyoPro to a patient who’s now able to use their arm and hand again for the first time in years. We look forward to replicating these successes in our markets in the U.S. and Germany as we have a very large opportunity in front of us to improve the lives of many individuals.

With our proprietary technology, we’ve established Myomo as the market leader with over 4,000 devices provided to patients with paralysis, and yet this is only about 1% penetration of the addressable market. Over 3 million individuals in the U.S. suffer from chronic arm paralysis and another 250,000 cases that result from the 800,000 strokes that occur annually in the U.S. We’ve already laid the foundation for executing our strategy of continued market penetration and revenue growth by hiring additional field clinical staff across the U.S. and Germany to develop more referral relationships with the physicians and therapists that treat these patients.

And this evolution of our go-to-market strategy will lead to a growing, durable business serving this patient population for years to come. Now Dave and I are ready to take your questions. Operator.

OPERATOR

We will now begin the question-and-answer session. To ask a question, you may press star then one on your telephone keypad. If you are using a speakerphone, please pick up your handset before pressing the keys. If at any time your question has been addressed and you would like to withdraw your question, please press star then two. At this time we will pause momentarily to assemble our roster.

Paul Godones (Chief Executive Officer)

While we’re waiting for the first question, I’d like to mention that next week we’ll be participating in the Craig-Hallum 17th Annual Alpha Select Conference in New York on November 17th. Dave and I, along with our new Chief Commercial Officer, Katie McClure, will attend in person at this conference and will be available for one-on-one meetings. Hey, operator, let’s go with the first question whenever you’re ready.

OPERATOR

The first question comes from Chase Knickerbocker with Craig-Hallum. Please go ahead.

Chase Knickerbocker (Analyst)

Good afternoon. Thanks for taking the questions for me. Maybe just first on pipeline adds, you know, we haven’t seen this seasonality in Q3 before. Do you kind of expect this going forward now that MYO Connect is a bigger piece of the pipeline strategy? And then second to that, you know, guidance implies most of the change was kind of in Q3 here. Appreciate your thoughts on October for kind of pipeline activity now that MYO Connect kind of brings a higher percentage of adds that are fill.

Is there some potential conservatism in Q4 or how to think about some of the positive kind of indicators that you gave around October?

Dave Henry (Chief Financial Officer)

Yeah. So regarding the pipeline adds, there were a couple of things. The seasonality that I mentioned was more around MYO Connect and trying to schedule screening days and things like that at these referring locations; we found it was a bit harder to do so during the summer months. The other part on the advertising side, I did mention that there were inefficiencies in the quarter, so that contributed to the 600 pipeline adds. And what I mentioned was, with the combination of the staffing constraints that we also had on the MYO Connect side during the third quarter, combined with what we think is fixing some of these inefficiencies on the DTC side, resulted in the 30% increase in pipeline adds in October.

So remember, though, that advertising is seasonally lower in the fourth quarter compared to the third. It’s something that we always do. So keep that in mind as you look at any projections for pipeline adds in the fourth quarter. And in terms of the conservatism in our forecast, I would just say that we try to give guidance that we believe is achievable.

Chase Knickerbocker (Analyst)

Understood. Maybe just on the commercial organization under Katie’s new leadership, what should we expect to change around commercial strategy and go to market?

Paul Godones (Chief Executive Officer)

Thanks, Chase. She’s been on board for months, been out in the field meeting with our team. She is looking at how we’re organized, where we ought to be staffing. We’ve already added several more clinicians in the field in the last 30 days because we’ve got this tremendous opportunity. She’s looking at how to organize, where should we add more clinical staff, compensation plans, and the like. So stay tuned. She’s only been here 30 days, but she brings a wealth of experience from a tremendous track record of growing Aspire Medical’s business over the eight years that she was there.

Chase Knickerbocker (Analyst)

Understood. Just last for me, appreciate that you’re certainly not giving guidance here, but just would appreciate some early thoughts on ’27, I guess. Do you think your guided range in 2026 from a revenue growth perspective is sustainable into 2027 and a decent way for us to think about potential growth? And then secondly on ’27, do you expect the same leverage target that you’ve given in ’26—growing revenue twice as much as operating expenses? Thank you.

Dave Henry (Chief Financial Officer)

Sure. I guess I’ll take the second one first. I think we’re in the process now of doing our planning for 2027, so I’ll defer my answer on the leverage target until we finalize those plans. And in terms of the revenue, we’re making this transition, we’re in the midst of it now, and I think we’ve done a pretty good job in 2026 trying to bring more of our revenues from recurring patient sources. We want to continue to build on that into 2027 and to continue with the progress that we’ve made. While I’m not giving any revenue guidance today, we are focused on trying to grow revenue as quickly as we can, while at the same time making sure that we maximize operating leverage and minimize the burden.

OPERATOR

The next question comes from Jeremy Pearlman with Maxim Group. Please go ahead.

Jeremy Pearlman (Analyst)

Okay. Good afternoon. Thank you for taking my question. Firstly, of the 500-plus MyoConnect locations, how should we look at how many—what percentage of them are actually submitting, generating orders for you? Should we look at the 80/20 rule—20% are generating 80% of the referrals? And if that’s the case, what are your plans to maybe bridge that divide between the top performers and the lower performers?

Paul Godones (Chief Executive Officer)

Thanks, Jeremy. The MyoConnect program is just a little over a year old now. Most of these referring facilities—we went in, met with the physicians and therapists, conducted the services and education, and received an initial referral. Typically, the process would be refer one patient to us; they want to make sure that the patient is medically qualified and that their insurance will pay for the device. After they get the device, these referring facilities will then treat the patient.

There’s a 12-week MyoPro therapy training protocol. After that, as they see good outcomes, they will then refer second and third patients. The ones that first came on a year ago are already starting to refer the second, third, or more patients. But a lot of them—like I mentioned, we had over 200 new ones in this third quarter—are typically just on their first patients. I expect that over time we’ll see same-store sales growth as they see the good outcomes from their patients that are referred. And about 30% of the referrals in the quarter came from these referring facilities that already had experience with MyoPro.

Jeremy Pearlman (Analyst)

Understood. And is there a better conversion rate, a higher conversion rate, from these MyoConnect versus historically the DTC, let’s say?

Paul Godones (Chief Executive Officer)

Yes, in a couple respects. One, we find that these are better qualified patients medically, because unlike the direct-to-consumer marketing where anybody who sees an ad will contact us and we do an evaluation of that patient, our clinicians do such a good job explaining who makes for a good MyoPro candidate in terms of inclusion criteria that more of these patient referrals actually enter the pipeline. And then, because we outline the typical payers in an area—whether it’s Medicare Part B, certain Blue Cross, or other plans covering the device—we see a higher authorization rate as well.

So I look at the quality of the pipeline coming from these referrals as much higher, both from a medical qualification as well as a reimbursement qualification.

Jeremy Pearlman (Analyst)

Understood. Okay, great. And then just this last question from us: you said that the marketing, the DTC, was having some headwinds this quarter. I know we’ve heard from other companies that it’s related to Google—the AI Overview—it’s really preventing some of the click-throughs that you would usually get. How should we look at what the issues were, and what steps did you take to rectify them? Thanks.

Paul Godones (Chief Executive Officer)

Yeah, I don’t think—when we look at social media and lead generation, most of it comes from Meta. So I’m not sure if Google, and whatever issues they had—I’m not actually aware of them—had much of an impact with respect to our pipeline adds in the third quarter.

Jeremy Pearlman (Analyst)

Okay, understood. All right, I’ll hop back in the queue. Thank you.

OPERATOR

The next question comes from Scott Henry with AGP. Please go ahead.

Scott Henry (Analyst)

Thank you, and good afternoon. I guess for starters, David, did you give us a cumulative reimbursement pipeline number?

Dave Henry (Chief Financial Officer)

I did not, but it’s a little over 1,400 at the end of the third quarter.

Scott Henry (Analyst)

Okay, great. And as we look at the metrics and the model which most people use to get down to product placements, the top of the funnel was always pipeline adds, which was the key number to try to gauge growth. Now, with over 50% coming from recurring patient sources, first of all, do all of those people make it through the top of the funnel? And second, should we be looking at it a little differently now given that half the patients are coming from recurring sources?

Dave Henry (Chief Financial Officer)

For pipeline adds, we still gather information from O&P providers to the extent that they provide it to us. We also gather it from our operations in Germany, as well as direct patient marketing. So, speaking of direct billing specifically, regardless of whether the patient comes from a referral or through advertising, we still track pipeline adds. For your modeling, I would say that pipeline adds is still the key metric to look at. But I will say—and I think Paul just mentioned it in response to a previous question—that the conversion rate, as the pipeline adds become more weighted in the future toward MyoConnect, we would expect a better conversion of those pipeline adds into revenue as compared to direct to patient. I gave a stat last quarter, which still holds true, that MyoConnect pipeline adds turn into revenue at a rate 10 times better than direct-to-patient advertising.

So I still think that pipeline adds is a good metric to model off of going forward.

Scott Henry (Analyst)

Okay. And as the hit rate goes up because the quality of the adds is higher, do you think the total pipeline adds will still drift up, and might they drift up at a lower rate because the hit rate’s higher? It looked like we were on our way to consistently in the 800s and perhaps eventually getting to four digits, but maybe that may take longer now if the hit rate’s higher—which isn’t a bad thing. I just wanted to get your sense of how we should think about that top of the funnel.

Dave Henry (Chief Financial Officer)

We would like to see that top of the funnel be as high as we can. But that hit rate, as you say, will have an effect, because in terms of growing revenue, it’s more about the quality of those pipeline adds as opposed to the sheer volume of them. That’s ultimately what will drive revenue going forward. Another way to say it: 800 pipeline adds yesterday is not the same as 800 pipeline adds in the future going forward because of this transition we’re making towards recurring patient sources.

Scott Henry (Analyst)

Okay. And anything different on the Medicare front that you’re seeing in Q4 versus Q3, or even Q3 versus Q2? How is that evolving? Or should we think more about the beginning of next year for where we may see some changes?

Dave Henry (Chief Financial Officer)

We continue to get reimbursement under our HCPCS code for the Medicare Part B patients. With the proper medical documentation, those patients are getting reimbursed for their device. Where we’re in-network with a payer’s contract, those contracts often include Medicare Advantage or commercial plans, and we have a higher authorization rate in those instances compared to being an out-of-network provider. That’s why we continue to invest in getting more payer contracts, because we do get more Medicare Advantage authorizations that way.

Scott Henry (Analyst)

Okay, great. Final question for me. I know you were asked on prior questions about your outlook in 2027 for revenue growth. Perhaps drilling it down a little bit, how do you think about the pricing environment going forward? Should we expect incremental gains, or perhaps as you come out with new models, maybe even larger pricing gains? Just wanted to get your thoughts on the topic.

Dave Henry (Chief Financial Officer)

Well, thanks, Scott. Most of the pricing really is established here in the U.S. by the CMS allowable fees. It’s now $68,800 for the flagship MyoPro G. We’ve seen price increases from Medicare based on the cost-of-living increases over the last couple years, around 2%–2.5%. I don’t know if those will continue, but the pricing is really set by CMS, and then that becomes the benchmark for all these commercial contracts that we enter into. Our O&P pricing is more of a wholesale pricing, because they do all the clinical work and reimbursement work to provide the device to the patients.

In Germany, the pricing is set again by the payers or health insurers such as TK and others, who take our pricing and work with the O&P who actually gets reimbursed for the device. We’re not planning to make any changes to that; it’s really dependent on what CMS does.

Scott Henry (Analyst)

Okay, great. Thank you for taking the questions.

Dave Henry (Chief Financial Officer)

You’re welcome.

OPERATOR

The next question comes from Sean Lee with HC Wainwright. Please go ahead.

Sean Lee (Analyst)

Hey, good afternoon, Paul and Dave, and congrats on a great quarter. I just have a couple questions. First, on the gross margin, we see that it’s up quite a bit year over year but down a little bit sequentially. I was wondering what are some of the pushes and pulls on that number? And also with things like the 3D printing in-house and the hand-only device in Germany, thinking about those, how do we expect the margins to move going forward?

Dave Henry (Chief Financial Officer)

Yeah, thanks for the question. Of the roughly 750 basis point increase in gross margin year over year, about 90 basis points was related to the 2% year-over-year ASP increase, about 190 basis points was related to material cost reductions that we put in place—and there are still others coming down the road, for example as you mentioned the 3D printing—and the rest was primarily due to higher volume and the spreading of fixed costs over that higher volume.

Paul mentioned the headcount—we’ve been holding down the headcount to the extent that we are able to—and that’s translating into benefits at the gross margin line. As you look at gross margins going forward, I would still say a low-70s gross margin is something that you should think of modeling, and we would expect incremental improvements. As I mentioned, fourth quarter gross margin is expected to be modestly higher as we have some of these improvements take effect, and then I would continue in that low-70s vein as you move into 2027.

Sean Lee (Analyst)

Got it. That’s very helpful. My last question is on the reimbursement side. As you mentioned, you tend to get better authorization rates once you’re in network and approved from these payers. Can you provide some color on the increase in authorization rates that you’re seeing once you are in network? And also, how many payers do you expect to expand over the next year or so in terms of new coverage?

Paul Godones (Chief Executive Officer)

Well, without going through this on a plan-by-plan basis, I would tell you that certain payers have a much higher authorization rate. They’re not at 100%, like we have with the Medicare Part B patients, but they are certainly up higher than when we don’t have a contract. And that’s why we’re going to continue to get more of these contracts, and when we get enrolled in state Medicaid plans. Those plans will often pay for the secondary co-pay for Medicare Part B patients.

So that helps raise our ASP by collecting that secondary insurance payment from that state Medicaid plan for certain patients.

Sean Lee (Analyst)

Got it. That’s all I have. And thanks again for taking my questions.

Paul Godones (Chief Executive Officer)

Great. Well, thanks, Sean. It was good to see you at the HC Wainwright conference back in September.

OPERATOR

Again, if you have a question, please press star then 1. The next question comes from Edward Wu with Ascendian Capital. Please go ahead.

Edward Wu (Analyst)

Yeah, congratulations on the quarter. My question is on Germany. You guys have done very well. Is it time to expand your focus beyond Germany into other EU countries? Thank you.

Paul Godones (Chief Executive Officer)

Yeah, thanks. Germany is doing very well. Another year of record revenues, year-over-year growth and so on. So we’re going to continue to double down in Germany. I mean, it’s a big market again, just like the U.S., very small market penetration so far. We’ve already added more clinical staff, business development staff to keep growing that business force. When I look at the best return on a euro, do I invest to try and open up a new market, or just do more in Germany because that converts to revenue much more quickly.

So for right now, even though there are certainly other market opportunities across Europe, we’re doubling down and just doing more in Germany. And the new hand product that’s being developed for Germany, that gets released in 2027, that will even further open up the market because right now some patients are not medically qualified for the MyoPro because they may have elbow movement, but they don’t have hand function. So that will address a need and further expand the market potential for us in Germany, and then we’ll bring that here to the U.S.

Edward Wu (Analyst)

Great. Thanks for answering my questions and I wish you guys good luck. Thank you.

Paul Godones (Chief Executive Officer)

Great. Thank you, Edward.

OPERATOR

This concludes our question and answer session. I would like to turn the conference back over to Paul Godones for any closing remarks.

Paul Godones (Chief Executive Officer)

Well, thank you, operator, and thanks to all of you for joining us today and for your questions. We look forward to seeing and hearing from you in the coming months. So please have a good evening and thanks again. Goodbye.

OPERATOR

The conference has now concluded. Thank you for attending today’s presentation. You may now disconnect.

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