Good afternoon. Thanks for joining us again at the 24th Annual Needham Healthcare Conference. I'm Mike Matson. I lead the MedTech and Diagnostics Equity Research team here. I'm pleased to introduce Myomo. Presenting from Myomo, we have Paul Gudonis, Chairman, President, and CEO, and David Henry, CFO. They're going to give a presentation on Myomo, and then we'll open it for questions at the end. You can submit questions through the Needham Conference website, or you can email them to me at mmatson@needhamco.com. With that, I'll turn it over to Paul. Thanks.
Thank you, Mike. It's a pleasure to introduce Myomo to you. Our mission is to conquer upper limb paralysis. As you'll see, we've got the only technology that is enabling paralyzed individuals to use their paralyzed arms and hands once again. Let's go through our safe harbor statement. As you'll see, thanks to reimbursement by Medicare now, it's a new world for people suffering from upper extremity impairment because now we've expanded access to our devices. From an investor's perspective, here are the key takeaways. CMS reimbursement, which started last April, just a year ago, has opened access to a large Medicare-age population. By the way, two-thirds of strokes happen to people age 65 and older, so now they have access to our device. As you'll see, there's a large prevalence population of over 3 million individuals just in the United States.
We believe that based on our experience, up to 600,000 of these patient candidates could have access to a MyoPro. We have the first mover advantage. We have a strong patent position. We're the only one in the market here in the United States, also in a couple of international markets. We are the technology leader. This came out of MIT and Harvard Medical School. We've got an exciting product development roadmap that we're investing in. We are both a device manufacturer, but also a direct provider ourselves, where we do direct billing to the insurance companies with our own clinical staff. Now we have the opportunity to not only expand that channel, but also develop the new orthotics and prosthetics channel for our devices. As Dave, our CFO, will explain, there's attractive margins to this business.
As we expand, there's opportunities for leverage due to scale here. Now, what causes arm and hand paralysis? The major diagnoses or indications are stroke, which happens 800,000 times a year just in the United States, 15 million times worldwide every year. Also, traumatic brain injuries, spinal cord injuries, brachial plexus, which is the nerve that connects the spinal cord into the shoulder. Some of the other indications are CP, MS, ALS, spinal muscular atrophy, acute flaccid myelitis. Some of those afflict more pediatric patients. What happens after someone has a stroke? What typically happens is due to the blood clot or hemorrhage in one side of the brain, you get damage to the motor cortex because you lose 2 million neurons every minute after a stroke occurs. It is very important to get to treatment right away.
Usually, you'll get stabilized in an acute care facility like Massachusetts General Hospital. You will go to someplace like Spaulding Rehabilitation Hospital for rehabilitation because the science behind the physical therapy is that if you exercise a limb over and over again, you can recreate the neural pathways that power that particular limb. Occupational therapists will work with the patient, as shown here, to try to get you to move that arm, try to open and close your hand and fingers. They may try a static bracing, Saebo, which is the spring-operated device, to open a spastic hand. There is electrical stimulation. Some of these clinics have bought these large stationary robotic systems. The whole idea is to try to get you rehabilitated. If you have high spasticity, where your arm and hand are tightly clenched, you might take Botox or baclofen. These do not restore function.
They may relieve the pain for a while, but it comes back, and you need another dose of these medications. The occupational therapy works for about half of the patients. The other half are typically told after 6 to 12 months, you've plateaued. There's nothing more we can do for you. Insurance won't pay for any more therapy sessions because you're not getting any better. You're left with this paralyzed arm. You're basically told, get used to it. You'll never use that arm and hand again for the rest of your life. What we're showing is that that conventional wisdom doesn't apply anymore because what's needed for this medical unmet need is a lightweight device that's portable. You can use it at home, at work, school, and in the community. Here's a short video about what happens to an individual after they've had a stroke.
Jessica Peters of Salem had a major stroke when she was just 26 years old. After the stroke, you really had no use to this arm then?
Nothing, really.
Despite years of therapy, her speech and right arm never fully recovered.
I used to dead arm.
Until she met the team at Myomo.
Just a dead arm. Think about how frustrating it would be if you woke up tomorrow morning and you were hemiparetic, where half of your body was paralyzed, and you can't use that arm for activities of daily living. This is a substantial market opportunity. Starting on the left-hand side, if you look at just stroke in just the United States, about 800,000 strokes every year. Every 40 seconds, there's a stroke. About 20%-30% of the individuals die as a result of the stroke or complications, like Luke Perry, the actor, died at age 52. David Stern, former NBA commissioner, died from his stroke. For those that survive, 500,000 or more, they will go through this type of occupational therapy, physical therapy for the legs, and so on.
The good news for them is that half of them will recover enough function to restore their normal activities. The other half, about 250,000 a year, are basically left with this chronic arm paralysis. At the top of that pyramid, we narrow down the inclusion criteria to up to about 20% of these individuals. That is another 50,000 every year that join this prevalence population in the right-hand pyramid here. If I start at the base, there are 3 million plus individuals that have suffered a stroke with this chronic arm paralysis. We narrow the inclusion criteria. You have to be living at home because if you are in assisted living, nursing home, insurance will not pay for this. You have other care for you. This is for people who want to stay out of these facilities, stay at home, be functional and independent.
We look at your medical condition. We screen these patients per these criteria that we agreed to with the medical directors at CMS, at Medicare. Some people get excluded there because you have to have enough, as you'll see, EMG signal to power the device. You have to be cognitively intact. You have to be well enough to be able to use this device and not just be some people are so injured, they're just lying in bed, not going to get up again, unfortunately. You want people that would benefit from this device. We look at what their insurance is. The good news is, as of last year, basically doubled the number of seniors that have access to this because about half the seniors are covered with Medicare Advantage plans, the others with Standard Fee for Service Medicare Part B.
As of last year, we can now serve those individuals instead of having to turn them away. That gets us to up to 600,000 potential candidates for MyoPro. We've delivered over 3,000 devices to patients during our history. That's an accelerating number, as you'll see in our revenue growth. The big news is about clarity on reimbursement. We were awarded HCPCS codes, the medical device billing codes, by Medicare back in 2019. However, they put us in the wrong category at that time. They consider this a short-term rental, like durable medical equipment, like an oxygen tank or a hospital bed. That's a standard off-the-shelf item used for a short period of time in the home, brought back, sanitized, and dispensed to the next patient.
We made the case that this is like a custom prosthetic device for amputees that a patient's going to wear for a long time. These are individually fabricated for each patient. It's not a short-term off-the-shelf rental. COVID delayed our appeal back to CMS, but eventually they opened up the public hearing. We presented our data. As of last year, they started covering this device. Effective January 1st of this year, we got a 2.4% increase. The fees are $34,000 for the Motion W, which is an elbow wrist unit, and $67,000 for our main product line, which is Motion G, which is the elbow, the wrist, and the hand. Over 90% of our unit volume are for the Motion G.
As a result of Medicare coverage, and we've had history with Medicare Advantage plans, they are supposed to cover what is medically necessary and what Medicare covers. We are getting paid by Medicare Advantage plans in some cases, whether it's UnitedHealthcare, some of the Blue Cross Blue Shield plans, Cigna, and so on. We are working with them to obtain payer contracts. The VA has been covering this for 10 years for patients in their care. Over 130 medical centers have already ordered MyoPros for their veterans. Internationally, our biggest market is Germany, good-sized market, over 80 million population, good economy. They like high-tech medical products. We are getting the statutory health insurers to pay for the device, firms like TK and Barmer and so on. We do a little bit of other business, Australia and a few other markets.
The key thing for Medicare here in the United States was our research. We have studies going back 10 years of our patient outcomes as a result of using the MyoPro. When we interviewed medical directors, they advised us, they said, "Well, if you'd like us to cover this, show us longer-term use in situ in the home." We created our own patient registry for real-world evidence. We followed patients for three months, up to 17 months. These are people in that target demographic, 65 and older. They showed significant positive outcomes as a result of using their custom MyoPro. We presented that to the CMS medical directors. As we saw, we got coverage as of April 1st last year. Here is a couple of examples of what patients can do with their paralyzed arms and a MyoPro.
I'm very satisfied. It changed my life. I'm doing things now that I could never do.
You can see how she can use both of her arms for cooking, other household tasks. Think of how difficult it would be to do this with only one arm. When this came in from our German team, if you're German, one of your activities of daily living may be opening your beer. Try doing this with one arm. Whether it's a pill bottle, a water bottle, brushing your teeth, getting dressed, doing laundry, these are the types of activities that we enable with our device. Now, let's talk about the science behind how it works. This came out of MIT and Harvard Medical School. When you're trying to pick up, for example, this cup, I'm sending a signal, in this case, from my left motor cortex through the central nervous system, spinal cord, into the peripheral nerve. That goes into the muscle.
If you're a healthy individual, the muscle responds. You can pick up a cup. You can feed yourself, do these other activities. Your muscles emit a trace microvoltage on the surface of the skin called the electromyogram or EMG signal, myo being the Greek word for muscle. Just like you might be familiar with a band that might pick up an EEG signal or EKG for cardio, your muscles emit this trace microvoltage. Now, for these individuals who've had a stroke, for example, they've had motor neuron damage in the motor cortex, and they have an attenuated signal, which is why they struggle. They're sending not enough signal into the arm, and so they can't move. They can't open the hand. However, just thinking about doing it creates enough muscular activity that it generates this trace EMG signal on the surface of the skin.
We have a proprietary brain-computer interface. These are non-invasive sensors, no craniotomy required. They're inside the brace. You just put on the brace. The sensors touch your skin by the bicep, the tricep, in the wrist, for the hand part of the device. You think about moving your arm, and it amplifies what you're trying to do. Our sensors have gotten so good with the software, we can take the faintest signal and amplify that by 100,000x. It is a lightweight device. It is some small motors. The microprocessor on board converts your signals into motion. Hence is why Maggie, a stroke survivor, said, "Gee, this is like my own motion." We have a strong IP portfolio, 35 patents in the U.S., selected international markets to go out to the year 2042. We have others pending as well.
I'm going to spend a little time now on how do we go to market? Because, again, there's 3 million plus patients here just in the U.S. However, they're not at the rehab hospital. They're not at the neurologist's office because these clinicians have said, "You're done. We can't do anything for you." They're at home. They're on social media. We advertise on television, on Facebook, on our website, and so on to basically generate leads. We get a significant number of leads every month. We have a call center in Fort Worth, Texas, now up to 18 people staffing it. We take these leads. We talk to the patients. We ask them about their insurance, their medical condition.
If they look qualified, we will do a free telehealth screening, just like this, a Zoom call, where one of our clinical staff will assess whether or not they would be a good candidate for the MyoPro. If we give them the go-ahead, they become part of our patient pipeline. We added over 600 patients to the pipeline just last quarter. We have to go through the reimbursement process because, like a hip or knee replacement, you just do not walk into a hospital to get a device like this. You need a pre-authorization from your insurance company if you have commercial plans. We have a Chief Medical Officer and his team with patient navigators who act as case managers, where you make sure you go to your physician for a face-to-face visit. We get a prescription for the device. We collect your medical documents.
It says you've had a stroke x years ago. You've tried other alternatives. This is the least costly, most functional option for you at this point. We will submit it to your commercial plan for a pre-authorization request. If it's Medicare Part B, because we've agreed on the medical criteria, if you meet those criteria, we can proceed to fit you with a device. That has actually accelerated the revenue cycle for what we call these Medicare Part B patients. We have to custom fabricate the device for you. We start out by measuring your arm. We can do it in person. Although during COVID, we invented a remote measurement kit. We send a briefcase to your home. You pop it open. One of our clinical staff gets on a Zoom call with you. We measure your arm. We take a scan of your hand.
We 3D print the shells that go on the bicep cuff as well as on the forearm. We assemble those here in our production facility in Burlington, Massachusetts. When the MyoPro 2 Plus is assembled and tested, we ship it out to either one of our clinicians or an orthotics and prosthetics practice who are these licensed professionals that fit it. There's software we provide on a laptop to adjust the settings for you to amplify your own signals. We send you to outpatient therapy at a convenient rehab hospital next June. We've got a team of trainers that train those rehab OTs and tell you how to use that device. You need to usually go one or two sessions for up to 12 weeks to relearn how to use an arm, sometimes 25 years after your stroke.
We have a team of MyoCare coaches that follow up with you over the first year to make sure that the device is working well for you and you're accomplishing those goals. Here's one of our TV ads because we realized that this demographic, often retired, is at home. They're watching TV. We found that this is a great way to demonstrate what the device can do for you. You'll see we now can say that this is covered by Medicare.
Have you or a loved one lost the mobility of an arm or hand that's been weakened due to stroke, other neuromuscular diseases, or injuries? What if there's a way to regain the use of that hand or arm again? How would your life change? The MyoPro orthotic device, a breakthrough in modern medical robotics, might be the answer to giving you the freedom to do even the simplest tasks again. MyoPro is a powered arm and hand orthosis designed to help restore function to the wearer's paralyzed or weakened upper extremities.
The MyoPro is the only device that senses an individual's EMG signals, which is the electrical activity delivered to the muscle, and helps the patient improve their ability to use their arms and hands so they can participate in the activities of daily living. In one word, it's empowerment.
Once I found out about the device and actually got one on, that really helped you mentally because I can learn how to do this again. These tools hadn't been used in seven years. If anybody tells you you can't get something back that you lost a few years ago, that's not a true statement.
The MyoPro is a unique and cutting-edge technology that expands the benefits of traditional clinic-based therapy to the home and daily life of the user. The goal is to provide them with a tool that can be worn on a daily basis to improve upper extremity movement, independence, and quality of life.
Here's your opportunity to regain your life back and enjoy doing the things you did before.
Now accepting Medicare.
All right, Dave, why don't you talk about then our financials here, our channel strategy?
Yeah. So what Paul just talked to you about earlier, showing you that go-to-market strategy, that represents our direct billing channel, what we call direct billing, where we are the direct provider of the device to the patient in addition to being the manufacturer. That represented 82% of revenue in the fourth quarter. Other channels include the O&P channels, both internationally and in the United States. Germany was 12% of revenue. That was most of where our international revenue came from in the fourth quarter, with 1% from the VA and then 5% from the U.S. O&P channel.
Now, that U.S. O&P channel is something that we're looking at to grow in 2025 and beyond because now that we have the clarity of reimbursement, now that Medicare is covering the device, the O&P channel is now much more interested in doing business with us because prior, there was no certainty of reimbursement, and they didn't want to make the investment to purchase a device or they didn't feel that there was a good chance of reimbursement. When you think of the O&P channel, they are primarily engaging patients that are in that incidence population that Paul showed you earlier. However, our advertising and such, our business activities are directed toward that prevalence population. We think that one plus one could equal fairly close to two as the O&P channel begins to ramp up here later in 2025 without significantly impacting our direct billing business.
We are in the process of training a number of O&P clinics around the country. More than 160 certified prosthetist orthotists have been trained so far through the end of the fourth quarter. We are obviously focusing on Hanger Clinics. They are the largest O&P provider in the country with more than 900 clinics around the United States. There are others that you see there. Of the 160 that we have trained, about 100 of them are Hanger. We are really focusing on them. We see the O&P channel as a big opportunity in 2025 because we do not need to spend the incremental dollars below the line in terms of reimbursement personnel, advertising, clinical personnel to support the O&P channel. We only need a few business development people and a few clinical trainers. Not a lot of incremental operating expenses to support that channel.
Now, the economics of that channel are that once we start to sell into it in volume, the price will be about half of what we might get from the direct billing channel. Most of that's going to fall through as compared on the direct billing side where we have all the incremental operating expenses that we have to incur as well. We think that despite a lower ASP and lower gross margin from the O&P side of the business, we think the incremental operating margins should be at or better than what we would see on the direct billing side. Internationally, I mentioned they were 12% of revenue. We have CE mark in Europe or FDA Class II, 510(k) exempt in the United States. We have a joint venture company in China, Jiangxi Myomo. We have a 19.9% equity interest there.
We don't have to put any cash into the joint venture. We're just contributing know-how and technology. It becomes a call option for Myomo shareholders down the road should that business take off, and maybe they spin it out someday as a way for Myomo shareholders to be monetized for that investment. Back to the direct billing channel in terms of the leading indicators that we look at, pipeline and backlog. Pipeline are those patients that have completed a successful telehealth call, but we don't have insurance authorization yet. In the case of a Medicare patient, we haven't collected the sufficient medical documentation, nor has the patient seen their physician yet. Those are criteria that are required in order to exit the pipeline. That pipeline at the end of December was 1,389 patients. That was up compared to 1,042 patients at the end of 2023.
We had a record 657 adds to the pipeline in the fourth quarter, and about 18% of that pipeline represents Medicare Part B patients. Once a patient exits the pipeline through either an insurance authorization or having sufficient medical documents, if they're a Medicare patient, they enter the backlog. That's those patients where we have that authorization to proceed, but we don't have revenue yet. That stood at 272 patients at the end of the fourth quarter. That was built on 233 authorizations and orders, which was a record in the fourth quarter, and 220 revenue units in the fourth quarter, which was also a record. The backlog declined a bit because the growth in the revenue units exceeded the growth in the authorizations and orders, but still a very healthy backlog.
When you look at our revenue trends on a quarterly basis, you can see that fourth quarter was $12 million, which was a record amount of revenue for the company. Our first quarter guidance is between $9 million and $9.5 million, which is going to be more than double year over year what our revenue was in the first quarter of 2024. There is a seasonality to the business because we slowed down on the advertising spending in the fourth quarter just because of the less efficiency due to holiday advertising, Medicare Advantage advertising, and in the case of 2024 election advertising, there's just more competition out there. As a result, the lead generation and the pipeline additions slowed down. As a result, generally, revenues in the first half of the year are lower than in the second half of the year.
You can see that trend has played out fairly consistently over the last several years. Looking at the P&L in greater detail, as I mentioned, revenue was $12.1 million. Gross margin was 71.4%. For the full year, revenue was $32.6 million on gross margin of 71.2%. Operating expenses were $8.9 million in the fourth quarter. They were higher because we're increasing our R&D spend. We also increased our spending throughout the, what I'll call the capacity chain to support the direct billing channel. Additional clinical personnel, marketing personnel, reimbursement personnel that are down in G&A, and then other people like human resources folks to support all of that growth. $8.9 million of operating expenses in the fourth quarter and then $29.4 million for the year. I would expect that operating expenses will continue to grow in 2025.
R&D expenses should roughly double because we are trying to take advantage of the first mover advantage that we have, spend more on R&D to bring newer products to market faster. With the growth expected in 2025 from our revenues, we expect to support that with additional operating expense growth. I would expect operating expenses will be more than $40 million in 2025. Over to the balance sheet, we had $24.9 million in cash and investments. Exiting the fourth quarter, for the first time in the fourth quarter, we generated positive free cash flow of $2.4 million. We did an offering in December of 2024 that generated $15.8 million of net proceeds, and that free cash flow is obviously excluding those proceeds. Looking at the cap table, we have 41.4 million shares outstanding.
That includes about 7 million pre-funded warrants that have a strike price of par value of $0.0001. They are basically common stock equivalents. We include them in our weighted average shares outstanding on the income statement, but they are not voting shares at this time. Those 668,000 warrants that were outstanding at the end of the fourth quarter have expired now. They expired in February 2025. Our full year revenue guidance is for $50-$53 million. You can see a consistent growth trend over the last decade. That growth rate of 54%-63% is driven by the additional investment we plan to make, as I mentioned earlier, in the direct billing channel and also expected growth in the O&P channel as we get towards the second half of the year.
Now, what's been driving the market recently has been the impact or the presumed impact on tariffs. We've done some analysis ourselves, and I just wanted to give an update of where we stand on that. Much of the materials that are used in the MyoPro, they're purchased from U.S. suppliers. We're assembled in the U.S. in Burlington, Massachusetts. There are materials though that are imported. That includes elbow and wrist motors, batteries, battery chargers, laptop computers. The countries of origin include China, Vietnam, and Switzerland, and some of those countries are subject to the higher tariffs. The current estimate is that the tariffs, as they currently stand, I realize that they were suspended yesterday.
If they are fully implemented at the rates that they stand now, that's expected to have a less than 100 basis points gross margin impact on the cost of a MyoPro in 2025. Now looking to China specifically because those tariffs continue to be ratcheted up, we expect that impact at these higher rates to be less than $100,000 in 2025. Not much impact from these tariffs on our gross margins for the full year. Certainly looking at China, not much impact China specifically. Also, Germany, we import the MyoPro or export the MyoPro to Germany from the United States. Right now, there's been no announcement of any retaliatory tariffs that could add cost to the MyoPro there. There is local competition from companies like Vincent Systems. Passing along any potential additional tariffs, we would need to review that.
Right now, international was 12% of revenue. We're not seeing any retaliatory tariffs at this time, but that could change down the road. Now, looking to our growth trajectory, there are a number of paths to increase revenues, and we expect to take advantage of a number of those in 2025. When we speak of increased penetration of the U.S. market, we're talking about Medicare Advantage plans that are now required to cover for the MyoPro now that full Medicare is covering for the device. Only about 40% of Medicare Advantage plans by volume have reimbursed for the MyoPro in the past. When I say volume, I mean market share. There is a lot of opportunity there with Medicare Advantage in Germany. We're also looking to expand there. Revenues were about $4.5 million in 2025. Back to the U.S. market, just a second.
I forgot to mention that there's continued work towards increasing the number of payers that are under contract. We have about half a dozen or so payers under contract, mostly Blue Cross Blue Shield plans. Those plans represent about 18.6 million covered lives. There's also the joint venture in China. If that should get up off the ground, we're entitled to about $10.75 million of incremental license fees over the next 10 years. Obviously, the continued penetration of Medicare Part B and then the O&P channel, which I mentioned. With the publishing of fees by Medicare, CMS has created a multi-billion dollar market where we have first mover advantage, and we're the only company in the U.S. that can provide the product that can bill under those two codes, L8701 and L8702. I'll turn it to Paul to talk about the board and the officers.
Yeah, thank you. We've got a very experienced team. People have been in medical technologies. Micah Mitchell used to work at Invacare and been in the DME business, growing our commercial operations. Dr. Coleman, 25 years as a Chief Medical Officer in related technologies. Malcolm Bach, very experienced head of engineering product strategy. John Frijters, an Ottobock and ReWalk veteran running our international business. Our board, I serve as chairman. We have six outside board members who bring skills such as Tom Kirk used to run Hanger Clinics, built that to a billion dollar company plus experts in reimbursements and medical device product development. Yitzchok Jakubowicz from AIGH representing investors. Heather Getz joined us this year this past year as a very experienced CFO and COO. This team has worked well together for a number of years. That's why we are scaling the business so successfully.
With that, I think we'll turn it over back to you, Mike, for any Q&A.
Yeah, thanks. I have a few questions. I guess first, with the Medicare coverage, I'm wondering how much of that is the elderly population? Because I thought, does Medicare cover some disabled people? Would there be people that are disabled because of their stroke that would be getting Medicare at a younger age? Or is it really just limited to the 65 plus population?
No, Mike, you're correct. While Medicare is designed for people 65 and older, if you've been disabled for a few years, you can get Medicare coverage. For example, Arise Prosthetics and Orthotics in Arizona recently fit a 58-year-old individual who'd had his stroke 12 years earlier. He's on Medicare, and he got his device as a result of that.
Okay. All right.
Have you, given the OpEx increasing and what you're planning this year, I'm assuming this is the case, but how much have you ramped up your kind of ad spending and whatnot since you got the Medicare coverage? How much has that really helped your kind of yield in terms of every dollar you're spending? Maybe customer acquisition cost is a better way to put it. I don't know if you're going to quantify that, but has that gone down now that there's a bigger pool of people out there that are covered?
Our cost per pipeline ad was about $1,200 in the fourth quarter. We mentioned that in the first quarter, Meta made some changes on their algorithm, which related to compliance and legal issues around HIPAA and around what information that could be used to target potential patients that could be used by advertisers.
We had a small period of time, four or six-week period here in the first quarter where we had lower leads. I do expect that the cost per pipeline ad will increase in the first quarter. Our operating assumption, aside from that transient event, is that as we increase the ad spending to around $6 million or more in 2025, we should see a commensurate number of pipeline ads so that the cost per pipeline ad should stay relatively flat compared with 2024. Full year 2024 was around $1,400-$1,500.
Okay, got it.
I think we're almost out of time, but I just wanted to ask one, and apologize if you've mentioned this and I missed it, but just from a revenue recognition point, at least with Medicare, are you at a point where you can book the revenue on the shipment, or do you have to wait till you actually collect payment?
We are now booking Medicare revenue at delivery, and if they have the right supplemental insurance, we'll book it for the full allowable. In the fourth quarter, more than 90% of our revenues were recorded at delivery.
All right. One more, I guess, just on gross margin. Is there room to, I imagine your volumes are growing pretty fast on the one hand, but on the other hand, I mean, this is sort of a semi-customized product. Are there efficiencies as volumes go up?
Should your gross margins go up as volumes grow here, or is it just that you're not going to necessarily benefit from that scale because of the customization?
I think it'll depend on the O&P channel and how quickly it ramps because, as I mentioned, the blended ASP will drop as the O&P channel ramps up. I think if that were to be the case, gross margins would come down. I still think for this year, I still think a gross margin in the 70% range is certainly realistic.
Okay. All right. I think we're out of time, so we're going to have to wrap up there, but thanks, guys.
All right.
Thank you.