Myomo, Inc. (MYO): PESTLE Analysis [Nov-2025 Updated]

You're evaluating Myomo, Inc. (MYO) and need to cut through the noise to see the real strategic levers. Forget the tech specs for a moment; the company's near-term success is defintely less about the impressive MyoPro device itself and more about two external factors: navigating the complex US reimbursement maze and scaling production efficiently. This PESTLE analysis maps the precise risks and opportunities, showing you exactly how political decisions-like securing a National Coverage Decision (NCD)-directly impact revenue, especially when the average Medicare reimbursement for a single unit can exceed $50,000. Let's map these forces to clear actions you can take.

Myomo, Inc. (MYO) - PESTLE Analysis: Political factors

Medicare National Coverage Decision (NCD) for MyoPro is the primary driver.

The single most important political and regulatory victory for Myomo, Inc. was securing favorable reimbursement from the Centers for Medicare & Medicaid Services (CMS). This decision, effective January 1, 2024, reclassified the MyoPro from Durable Medical Equipment (DME), which was reimbursed as a complex rental, to a custom-fabricated orthosis, or brace. This change aligns Medicare's payment methodology with private insurers, moving to a lump-sum payment upon delivery, which is vital for cash flow and patient access.

For the 2025 fiscal year, this classification provides clear, national fee schedules for Medicare Part B beneficiaries. Medicare pays 80% of these national fees, significantly de-risking the revenue cycle for the company. Here are the key national fee amounts:

This decision opens access to the entire Medicare-age population, a huge market shift. The next step is converting this national fee schedule into consistent, streamlined coverage policies across all Medicare Administrative Contractors (MACs).

State-level Medicaid and private payer coverage policies create market fragmentation.

While the CMS decision is a national win, Myomo still faces significant market fragmentation at the state level, particularly with Medicaid (known as MO HealthNet in Missouri, for example) and various private payers. Medicaid is jointly funded by the state and federal government, with the federal match rate (Federal Financial Participation, or FFP) for programs like the Children's Health Insurance Program (CHIP) being 75.72% for Federal Fiscal Year (FFY) 2025 in some states.

This joint funding means coverage for optional services like the MyoPro varies widely by state. You have to fight 50 different battles, plus countless private payer negotiations. The company must continue to secure individual consideration based on medical necessity for patients covered by:

• State Medicaid plans (which may deem the device investigational).
• Medicare Advantage plans (which set their own coverage criteria).
• National and regional commercial insurance plans.
• Worker's compensation and auto insurance carriers.

This fragmentation slows order conversion and increases the complexity and cost of the sales process. If onboarding takes 14+ days, churn risk rises.

US government healthcare spending and budget priorities affect device adoption.

The overall US health spending environment for 2025 is favorable for high-value medical technology, despite cost-containment efforts in pharmaceuticals. CMS projects total US health spending will reach $5.6 trillion in 2025. Crucially, the Congressional Budget Office (CBO) projects major federal health program spending for FY 2025 to include $942 billion for Medicare and $656 billion for Medicaid.

The Biden Administration's FY 2025 Budget for the Department of Health and Human Services (HHS) also proposes investing $150 billion over 10 years to improve and expand Medicaid home and community-based services (HCBS). This specific focus on HCBS is a positive tailwind, as MyoPro is a device designed to allow individuals with disabilities to remain in their homes and communities, aligning directly with this budget priority.

Regulatory approval speed by the Food and Drug Administration (FDA) impacts commercialization.

The FDA regulatory path is a low-risk political factor for Myomo. The MyoPro product line, including the current MyoPro 2x, is a Listed FDA Class-2, 510-K exempt device. This means the device is considered low-to-moderate risk and does not require the lengthy premarket approval (PMA) process. The regulatory clearance is already in place for commercialization.

The company operates under a Quality Management System (QMS) certification via the Medical Device Single Audit Program (MDSAP). This stable regulatory status allows Myomo to focus its resources almost entirely on the reimbursement and market access challenges, not on the initial regulatory clearance.

Lobbying efforts to secure coverage for powered upper-limb orthoses.

Myomo's lobbying and advocacy efforts have been highly effective in the most critical area: CMS. Senior members of Myomo's clinical team testified at the CMS public hearing in 2023 and met with Medical Directors. This direct advocacy was instrumental in getting the MyoPro reclassified as a brace, which was the key to unlocking the Medicare market.

The ongoing political action now shifts to two areas:

• Defending the brace classification against any future administrative challenges.
• Continuing state-level advocacy to secure favorable coverage policies from the remaining 50+ state Medicaid and private payers, which is a defintely a resource-intensive, long-term effort.

The total federal lobbying spending across all industries topped $4.5 billion in 2024, showing the intense competition for Washington's attention. Myomo's targeted advocacy on the brace classification proved that a focused, evidence-based approach can yield a massive return on investment, even without the multi-million-dollar spending of the largest lobbying entities.

Myomo, Inc. (MYO) - PESTLE Analysis: Economic factors

The economic landscape for Myomo, Inc. in 2025 is a study in conflicting forces: significant revenue tailwinds from favorable Medicare policy are being partially offset by relentless inflationary pressure on manufacturing and a higher cost of capital.

High out-of-pocket costs for patients, even with insurance, slow adoption.

While the MyoPro device is often covered by insurance, the economic friction for patients remains a significant barrier to adoption. The average selling price (ASP) for a MyoPro unit in the second and third quarters of 2025 was approximately $54,200. Even with insurance, a patient's out-of-pocket cost, including co-pays, deductibles, and co-insurance, can still be substantial, often representing a significant financial commitment. This high upfront cost, combined with the lengthy and complex authorization process (utilization management), slows down the patient journey, which can take months or even years to convert a lead into a sale.

Here's the quick math: a 20% co-insurance on a $54,200 device is over $10,800. That's a big check for most families.

• ASP per MyoPro unit (Q2/Q3 2025): Approximately $54,200.
• Medicare Part B patients represented 54% of third-quarter 2025 revenue, highlighting the reliance on government reimbursement.
• The complexity of securing insurance authorization acts as an economic gatekeeper, reducing patient velocity.

Inflationary pressures increase manufacturing and supply chain expenses.

Persistent inflation in the US economy is directly eroding Myomo's gross margins. The company's financial reports for 2025 clearly show the impact of rising input costs, particularly for materials and overhead. This isn't just a general market trend; it's a specific drag on profitability that requires constant management.

For example, the gross margin for the second quarter of 2025 dropped to 62.7%, a notable decrease from 70.8% in the same period of 2024. The company attributed this decline primarily to 'higher material and overhead spending' in Q2 2025. Similarly, the third quarter of 2025 saw the gross margin at 63.8%, down significantly from 75.4% in Q3 2024, with higher material, payroll, and lease costs being the main drivers. Labor and overhead spending increases accounted for approximately 800 basis points of the Q3 gross margin decline compared to the prior year. The cost of advanced electronics and machinery, a key component of the MyoPro, has been under pressure, with machinery prices increasing by nearly 10% in 2023 alone, a trend that carries forward into 2025.

Interest rate environment affects access to capital for expansion.

As a growth-focused medical robotics company, Myomo's expansion plans are sensitive to the cost of capital (the interest rate environment). The prevailing high-interest rate environment in 2025 means that securing debt financing for working capital, research and development (R&D), and sales channel expansion is more expensive. This higher cost of debt directly impacts the company's bottom line and its ability to fund aggressive growth.

A concrete example of this is the Loan and Security Agreement entered into on November 4, 2025. The loans bear interest at an annual rate equal to the sum of 4.75% and the prime rate as reported in The Wall Street Journal. This structure ties the company's borrowing cost to the Federal Reserve's policy, making financing costs variable and elevated, which is a major factor when planning for increased headcount and higher R&D spending, which rose 65% in Q2 2025 compared to the prior year.

The average Medicare reimbursement rate for MyoPro devices is a critical revenue factor, often exceeding $50,000 per unit.

The Centers for Medicare & Medicaid Services (CMS) finalized the DMEPOS (Durable Medical Equipment, Prosthetics, Orthotics, and Supplies) fee schedule rates for the MyoPro, which became effective on April 1, 2024, and underpin 2025 revenue. This clarity on reimbursement is a major economic opportunity, as it provides a predictable, high-value revenue stream. Medicare Part B patients represented 56% of Myomo's second-quarter 2025 revenue.

The average Medicare reimbursement rate varies significantly based on the device model, as shown below. The combined average is well over the $50,000 mark, making Medicare a primary economic driver.

Healthcare provider budget constraints affect capital equipment purchases and training.

For the O&P (Orthotics and Prosthetics) clinics and other healthcare providers who fit the MyoPro, capital constraints can slow the adoption of new technology. The MyoPro is a high-ticket item, and while the new lump-sum reimbursement model from CMS provides greater clarity, providers still need to manage the cash flow gap between purchasing the device and receiving the payment.

The good news is that the new, clear reimbursement pathway is encouraging growth in the O&P channel. The company completed initial training for more than 300 certified prosthetist orthotists (CPO's) as of March 31, 2025, which suggests that the economic clarity is overcoming some of the initial budget hurdles. Still, a provider's decision to invest in training and inventory is a capital allocation decision, and the current economic environment makes those decisions conservative. This is a classic risk/reward trade-off for the O&P partners.

Myomo, Inc. (MYO) - PESTLE Analysis: Social factors

Growing awareness and acceptance of robotic orthotics for stroke and paralysis

The societal view of paralysis and stroke recovery is shifting from long-term institutional care to maximizing functional independence, which directly benefits Myomo, Inc. (MYO). The MyoPro is a powered upper-limb orthosis (a brace that supports or corrects a limb) that uses a patient's own electromyography (EMG) signals to restore arm and hand function. This technology is now seen less as a futuristic aid and more as a practical, non-pharmacological therapeutic option.

This acceptance is evident in the company's patient pipeline growth. In the third quarter of 2025, Myomo's patient pipeline grew to 1,669, marking a significant 32% increase year-over-year. That's a clear signal that awareness and demand are accelerating, and it directly supports the push for robotics and exoskeletons as practical tools in neurological rehabilitation.

Aging US population increases the addressable market for mobility solutions

The demographic shift in the United States is creating a massive and sustained tailwind for companies like Myomo. The baby boomer generation is aging, which means the pool of potential MyoPro users is expanding rapidly. The Centers for Disease Control and Prevention (CDC) estimates over 800,000 strokes occur annually in the U.S.

The sheer size of the target demographic is compelling. The U.S. population age 65 and older reached 61.2 million in 2024, representing 18.0% of the total population, and this cohort grew by 13.0% between 2020 and 2024. This trend is a defintely a long-term driver.

Here's the quick math on the market opportunity based on the senior population:

Patient advocacy groups significantly influence payer reimbursement decisions

For a high-cost device like the MyoPro, the social factor of patient advocacy is intrinsically tied to the financial factor of reimbursement. Patient groups wield considerable power in pushing for coverage of life-changing technologies. The company's focus on direct billing and the Orthotics and Prosthetics (O&P) channel is a direct response to navigating this complex system.

The critical shift came with the Centers for Medicare & Medicaid Services (CMS) remitting lump sum reimbursements for MyoPros delivered to Medicare Part B beneficiaries, based on new Healthcare Common Procedures Coding System (HCPCS) fees effective in April 2024. This clarity is huge, and it's often the result of years of pressure from patient and provider groups to recognize the clinical value of the device. The company achieved a record number of insurance authorizations and orders in 2023, totaling more than 600, showing the system is responding.

Cultural shift toward functional independence and home-based rehabilitation

The desire to recover at home, maintain a job, and live independently is a powerful social trend that favors Myomo's portable technology. The rise of home-based care models is a key trend in 2025 rehabilitation, driven by the push for convenience, comfort, and reducing costly hospital readmissions.

The MyoPro is perfectly positioned for this shift, as it enables patients to perform activities of daily living outside of a clinical setting. The broader trend of remote therapeutic monitoring (RTM) and telehealth, which insurance companies are increasingly reimbursing, validates the move away from traditional clinic-only models. This cultural preference for autonomy and home recovery drives demand for devices that are:

• Non-invasive and patient-controlled.
• Portable for use in daily life.
• Effective in reducing reliance on caregivers.
• Supported by remote monitoring technologies.

Demand for non-pharmacological, long-term therapeutic options is rising

There is a strong societal preference for non-drug treatments, especially for chronic conditions like paralysis following a stroke. Patients and payers alike are seeking long-term solutions that address the root of functional loss, not just the symptoms. The MyoPro, as a neurological-based treatment, falls squarely into this category.

The device leverages the brain's neuroplasticity (the ability of the brain to reorganize itself by forming new neural connections) to retrain the brain-body connection, offering a therapeutic benefit that extends beyond the time the device is worn. This aligns with the broader adoption of advanced technologies-like robotics and virtual reality-in rehabilitation to achieve better long-term outcomes and greater access to care.

Myomo, Inc. (MYO) - PESTLE Analysis: Technological factors

The core technology for Myomo, Inc. is its MyoPro line of myoelectric orthoses (powered braces), which are essentially a form of wearable medical robotics. The technological landscape presents both a critical challenge for continuous improvement and a massive market opportunity, especially as the global exoskeleton market is estimated at $0.57 billion in 2025 and the upper-limb segment is projected to grow at a 27.41% Compound Annual Growth Rate (CAGR) to 2030. [cite: 11 in step 2, 14 in step 2]

Continuous need for improvements in battery life and device weight.

In the medical robotics space, the holy grail is always lighter weight and longer battery life. While the MyoPro is already a leading solution, its effectiveness is still tied to the user's comfort and the device's operational runtime. The MyoPro 2x, launched in April 2025, addresses this by focusing on a streamlined design and user-centric features. [cite: 7 in step 2]

The device uses two interchangeable, lithium-ion battery packs to maximize the user's daily operating time, a smart way to manage the trade-off between device weight and power. For a user, this means less downtime and more independence. The elbow motor itself provides a tangible lifting assistance of at most 5 lbs, a critical performance metric for daily activities.

Competition from advanced non-invasive therapies and rival exoskeletons.

Myomo operates in a competitive and rapidly evolving field. You are not just competing with other robotic exoskeletons; you are also competing with advanced non-invasive therapies. The company's key differentiator is its use of electromyography (EMG) signals to amplify the user's residual muscle movement, unlike Functional Electrical Stimulation (FES) devices that externally stimulate the muscle. This is a key distinction.

In the direct exoskeleton market, Myomo faces established and well-funded rivals. These competitors are also driving R&D into lighter materials and more sophisticated control systems, which keeps the pressure high.

• Rival Exoskeleton Companies:
• Ekso Bionics (U.S.)
• ReWalk Robotics (now Lifeward)
• CYBERDYNE, Inc. (Japan)
• Bionik Laboratories Corp.

The market is growing fast, but the high average selling price of a MyoPro unit, which was approximately $54,300 in the third quarter of 2025, means every technological advantage must be clearly demonstrable to justify the cost over alternative treatments. [cite: 3 in step 1]

Integration of Artificial Intelligence (AI) for more personalized and intuitive device control.

The concept of AI here is less about a chatbot and more about smart, adaptive control systems. The MyoPro's proprietary technology is built on a sophisticated EMG-control circuit that filters and processes faint nerve signals to translate them into motor movement.

The latest MyoPro 2x uses the MyConfig software interface, which allows clinicians to fine-tune device settings for each patient's unique level of impairment. This is where the personalization happens. One clean one-liner: The software makes the brace feel like power steering for your arm. [cite: 4 in step 2]

Key technological features enabling this personalized control include:

• Advanced EMG Monitoring: Real-time graphical representation of the user's muscle signals for clinician review.
• Customizable Speed Control: Allows users and clinicians to adjust the motor's speed for more natural arm movement in selective modes. [cite: 12 in step 2]
• Behavioral Customization: Configuration options that adapt device performance to user preferences and specific functional tasks. [cite: 12 in step 2]

Telehealth platforms enable remote patient fitting, training, and monitoring, cutting costs.

The shift to home-based care is a major tailwind, and Myomo is capitalizing on it with its MyoConnect platform. This platform is designed to strengthen relationships with therapists and physicians to create a scalable, lower-cost source of qualified patient referrals. [cite: 4 in step 1]

The newest MyoPro 2x model directly supports this strategy by integrating common customizations into the standard design and using features like color-coded tabs and rings for simplified donning. Here's the quick math: reducing the complexity of the initial setup and training reduces the clinician's time commitment, which in turn lowers the overall cost-to-serve. This emphasis on remote-friendly design is a direct attack on the high logistics and labor costs traditionally associated with custom medical devices, helping to lower the cost per pipeline add. [cite: 4 in step 1]

What this estimate hides is the need for consistent, high-speed internet access for all patients to fully utilize the remote monitoring and training features, but the direction of travel is defintely toward greater remote care efficiency.

Myomo, Inc. (MYO) - PESTLE Analysis: Legal factors

You need to understand that the legal landscape for Myomo, Inc. is less about fighting lawsuits and more about codifying market access and protecting proprietary technology. The biggest legal wins in 2024/2025 have been regulatory, specifically around Medicare reimbursement, but the compliance burden with federal agencies like the FDA and HHS is defintely increasing.

Intellectual property protection, like patents on the MyoPro technology, is vital for market exclusivity.

The core value of Myomo, Inc. rests on its intellectual property (IP), which secures its position as the primary supplier of a myoelectric powered upper-limb orthosis. Their patent portfolio is robust and strategically global. For instance, a key U.S. patent, Patent No. 10,758,394, extends protection on most MyoPro models through March 2039. This long-term exclusivity is critical for justifying the device's high Average Selling Price (ASP), which was approximately $54,200 per unit in the second quarter of 2025. The MyoPro Motion G product, which generated 96% of the company's product revenue in 2023, is covered by these patents, meaning its primary revenue driver is legally protected for the next decade and a half. The company currently holds 12 patents issued worldwide, 2 exclusive licensed patents, and 9 patents pending.

Ongoing legal challenges to secure national coverage determinations (NCDs).

This is where Myomo, Inc. has turned a legal challenge into a significant commercial opportunity. The long-standing legal and regulatory effort to change the Centers for Medicare & Medicaid Services (CMS) classification paid off. As of January 1, 2024, the MyoPro was re-classified from the unfavorable Durable Medical Equipment (DME) category, which was reimbursed as a monthly rental, to the more appropriate brace category.

This re-classification is a game-changer. It means reimbursement is now a lump-sum payment upon delivery, aligning with other custom orthotics and prosthetics. The financial impact is clear: Medicare Part B patients accounted for 56% of Myomo's Q2 2025 revenue. Furthermore, the company is leveraging this regulatory victory to secure commercial contracts, having signed or pending agreements with state Blue Cross Blue Shield (BCBS) plans covering 18.6 million lives as of April 2025.

Strict adherence to the FDA's Quality System Regulation (QSR) for medical device manufacturing.

Myomo, Inc. is an FDA Registered medical device company, and the MyoPro 2x is classified as a Listed FDA Class-2, 510-K exempt device. They must maintain strict compliance with the Quality System Regulation (QSR), which is now in a state of transition. The FDA is phasing in the new Quality Management System Regulation (QMSR), which is set to become enforceable on February 2, 2026.

For 2025, this means Myomo must not only comply with the existing QSR but also actively prepare for the QMSR, which places a significantly heavier emphasis on risk management and transparency, including the review of internal and supplier audits by FDA investigators. The broader regulatory environment is also tightening; as of early September 2025, the FDA had issued 19 warning letters for QSR violations, surpassing the total of 12 for the same period in 2024.

Compliance with the Health Insurance Portability and Accountability Act (HIPAA) for patient data privacy is mandatory.

As a healthcare entity dealing with patient data, Myomo, Inc. must strictly comply with the Health Insurance Portability and Accountability Act (HIPAA). The legal requirements here are escalating, particularly concerning cybersecurity.

The Department of Health and Human Services (HHS) released a Notice of Proposed Rulemaking (NPRM) in January 2025 to bolster the HIPAA Security Rule. This proposed rule, expected to be finalized soon, signals that new requirements are coming, including:

• Mandatory multi-factor authentication (MFA) for all systems accessing ePHI.
• Continuous, risk-based security operations rather than annual risk assessments.
• Stricter requirements for managing AI systems that process patient data.

The legal expectation is moving from periodic compliance checks to a real-time, risk-based security posture. This will require a non-trivial investment in IT infrastructure and compliance training.

Product liability and malpractice risk for high-cost, life-changing medical devices.

The nature of the MyoPro-a custom-fabricated, life-changing robotic device-inherently exposes Myomo, Inc. to product liability and potential malpractice claims, even though they have not been subject to such claims to date. The high cost of the device (ASP of approximately $54,200) reflects the complexity and the high stakes involved in its failure, meaning any future claim could carry a significant financial and reputational cost.

The company's accrued warranty liability, a proxy for future product quality costs, rose from $129,615 at the end of 2023 to $231,108 at the end of 2024. While this is a warranty expense, not a legal liability, the trend indicates increasing financial exposure related to product performance and quality. This is a risk that must be managed through stringent quality control and sufficient product liability insurance.

Myomo, Inc. (MYO) - PESTLE Analysis: Environmental factors

Need for sustainable sourcing of electronic components and raw materials.

Myomo's environmental risk begins with the sourcing of specialized components for its MyoPro device. The company relies heavily on imported materials, including motors for the elbow and grasp assemblies, as well as the lithium-ion batteries and chargers. The reliance on a global supply chain for these complex electronic parts exposes Myomo to geopolitical and environmental sourcing risks, such as those related to conflict minerals or raw material scarcity.

While the company is focused on managing costs, noting that tariffs are expected to have a financial impact of less than a 100 basis point (1%) on gross margin in the 2025 fiscal year, this metric only covers trade policy, not environmental sourcing costs. Without a public-facing conflict minerals policy or a detailed supplier code of conduct focusing on sustainable extraction, Myomo faces a reputational and compliance risk, especially as large institutional investors increasingly screen for Environmental, Social, and Governance (ESG) factors.

Compliance with e-waste (electronic waste) and disposal regulations for lithium-ion batteries.

The MyoPro is a battery-embedded product, which places Myomo directly under the scope of rapidly evolving U.S. e-waste (WEEE equivalent) and battery recycling legislation in 2025. The device uses two interchangeable lithium-ion battery packs, which are classified as hazardous waste at end-of-life due to fire risk and toxic content. The company's user manual explicitly cautions users, 'Do not incinerate the Lithium Ion battery pack.'

The regulatory pressure is immediate in key U.S. markets:

• California's SB 1215: Requires manufacturers of covered battery-embedded products to notify retailers and regulatory agencies by July 1, 2025, regarding products subject to the new recycling fee.
• Illinois's SB 3686: Requires battery producers to submit a stewardship plan for portable and medium-format batteries by July 1, 2025, for a program taking effect in January 2026.

Myomo's current model directs users to 'Contact your Provider to order a new battery' if the existing one is failing after about 12 months, but it is not publicly clear if the company has established a formal, nationwide Producer Responsibility Organization (PRO) or a take-back program to manage the mandated end-of-life recycling for the thousands of units in circulation.

Energy consumption footprint of manufacturing and device operation.

The company operates a new corporate headquarters and manufacturing facility in Burlington, Massachusetts. While specific energy consumption data (e.g., Scope 1 and 2 greenhouse gas emissions) for the 2025 fiscal year is not publicly disclosed, manufacturing is a critical cost center. Management has initiated cost reduction projects expected to generate an aggregate of 200 basis points of gross margin improvement, with savings fully realized starting in the third quarter of 2026.

This initiative is a clear opportunity for energy efficiency investments in the manufacturing process, which would reduce the operational carbon footprint. The device itself is a low-power, myoelectric orthosis, meaning its primary energy draw is limited to the small motors and EMG sensors, powered by the lithium-ion battery packs. This operational energy footprint is negligible compared to large medical imaging or industrial equipment.

Supply chain resilience against climate-related disruptions affecting component availability.

Myomo's supply chain for motors and electronics is global, making it vulnerable to climate-related disruptions like extreme weather events, which can shut down ports, factories, and logistics networks, especially in Asia where much of the world's electronics are produced. The company's primary focus is on managing geopolitical risks like tariffs; however, physical climate risks are a growing threat to component lead times.

The table below outlines the key physical and transitional risks Myomo faces in its supply chain in 2025:

Focus on device longevity and repairability to reduce replacement cycles.

The MyoPro's design inherently supports a degree of longevity and repairability, which is a significant environmental advantage over single-use or disposable medical devices. The core mechanical assembly (MARK) has an expected life of five years, and the main electronics and hardware are covered by a three-year warranty.

However, the company maintains a tight, manufacturer-controlled repair loop. The warranty is voided if repairs or modifications to the motors or electronics are performed by unauthorized staff. This closed-loop service model ensures quality and regulatory compliance but also centralizes the responsibility and cost of repair/refurbishment with Myomo, Inc. The focus is clearly on extending the life of the high-value components, which is the most effective way to reduce the environmental burden of manufacturing a new unit.