ReWalk(LFWD) - 2024 Q3 - Quarterly Report

Revenue and Profitability - Revenue for the nine months ended September 30, 2024, was $18.118 million, compared to$6.970 million for the same period in 2023[19] - Gross profit for the nine months ended September 30, 2024, was $6.372 million, compared to$2.010 million for the same period in 2023[19] - Net loss for the nine months ended September 30, 2024, was $13.664 million, compared to$16.494 million for the same period in 2023[19] - The company reported a net loss of $13,664 thousand for the nine months ended September 30, 2024, compared to a net loss of$16,494 thousand for the same period in 2023[23] - The company incurred a consolidated net loss of $13.7 million and has an accumulated deficit of$249.5 million as of September 30, 2024[32] - The company's total revenues for the nine months ended September 30, 2024, were $18.1 million, with product revenue contributing$13.7 million[54] - Revenue for the three months ended September 30, 2024 increased by $1.7 million (39$11.1 million compared to the same period in 2023, primarily due to increased ReWalk system sales from Medicare coverage expansion, stronger sales in Germany, and the revenue contribution from the AlterG acquisition[158] - Gross profit for the three months ended September 30, 2024, was $2.2 million, representing 36.2$0.9 million (19.6% of revenue) for the same period in 2023[159] - Gross profit for the nine months ended September 30, 2024, was $6.4 million, representing 35.2$2.0 million (28.8% of revenue) for the same period in 2023[160] - The company incurred a consolidated net loss of $13.7 million for the nine months ended September 30, 2024, with an accumulated deficit of$249.5 million and negative operating cash flow of $17.7 million[178] Expenses and Costs - Research and development expenses for the nine months ended September 30, 2024, were$3.494 million, compared to $2.830 million for the same period in 2023[19] - Sales and marketing expenses for the nine months ended September 30, 2024, were$13.573 million, compared to $9.076 million for the same period in 2023[19] - General and administrative expenses for the nine months ended September 30, 2024, were$3.424 million, compared to $7.579 million for the same period in 2023[19] - Share-based compensation increased to$1,047 thousand for the nine months ended September 30, 2024, from $955 thousand in the same period in 2023[23] - Research and development expenses for the three months ended September 30, 2024, decreased by$0.3 million (20.1%) to $0.9 million, primarily due to the completion of the ReWalk 7 development program[162] - Research and development expenses for the nine months ended September 30, 2024, increased by$0.7 million (23.5%) to $3.5 million, primarily due to the acquisition of AlterG and new product development projects[163] - Sales and marketing expenses for the nine months ended September 30, 2024, increased by$4.5 million (49.5%) to $13.6 million, driven by higher personnel-related expenses and promotional activities following the AlterG acquisition[167] - General and administrative expenses for the three months ended September 30, 2024, decreased by$3.2 million (93%) to 0.3 million, primarily due to a reduction in M&A-related expenses[169] - General and administrative expenses for the nine months ended September 30, 2024, decreased by 4.2 million (54.8%) to 3.4 million, primarily due to a reduction in M&A-related expenses and income from the remeasurement of the earnout liability[170] - Financial income, net, for the nine months ended September 30, 2024, decreased by 0.6 million (52.7%) to $0.5 million, primarily due to a lower cash balance resulting from the AlterG acquisition and funding of growth[172] - The company expects to save approximately$3 million in operating expenses and improve gross margins by closing two U.S. facilities and reducing headcount by over 35% following the AlterG acquisition[179] Cash Flow and Financial Position - Net cash used in operating activities for the nine months ended September 30, 2024, was $17,749 thousand, compared to$16,183 thousand for the same period in 2023[23] - Cash, cash equivalents, and restricted cash decreased from $28,792 thousand at the beginning of the period to$11,014 thousand at the end of September 30, 2024[23] - The company's cash and cash equivalents totaled $10.7 million, with a negative operating cash flow of$17.7 million for the nine months ended September 30, 2024[32] - Net cash used in operating activities increased by $1.6 million, or 9.7$18.1 million, primarily due to the acquisition of AlterG in 2023[189] - Net cash used in financing activities decreased by $1 million, or 100$9.657 million, down from $11.795 million as of December 31, 2023[17] - Total long-term liabilities as of September 30, 2024, were$2.220 million, down from $4.887 million as of December 31, 2023[17] - Total shareholders' equity as of September 30, 2024, was$33.893 million, down from $46.510 million as of December 31, 2023[17] - Total shareholders' equity decreased from$58,974 thousand as of June 30, 2023, to $33,893 thousand as of September 30, 2024, reflecting a net loss of$13,664 thousand during the period[22] - The company's earnout liability decreased by $2.5 million, resulting in a balance of$792,000 as of September 30, 2024[52] - The company's total contractual obligations as of September 30, 2024, amounted to $7.78 million, including purchase obligations, collaboration and license agreements, operating lease obligations, and earnout liabilities[191] - The company's operating lease obligations include payments for facilities in the United States and Israel, as well as motor vehicles[191] Acquisitions and Investments - The company acquired AlterG, Inc. for a cash purchase price of approximately$19 million, with additional earnouts based on AlterG's year-over-year revenue growth over the next two years[29] - The company acquired AlterG in August 2023 for approximately $19 million, with additional earnouts based on revenue growth over the next two years[140] - Goodwill from LCAI acquisition recorded at$7.5 million, with intangible assets valued at $14.1 million[84][85] - Total amortized intangible assets amount to$10,020 thousand, with estimated amortization expenses of $842 thousand for the remaining period of fiscal 2024,$3,307 thousand for fiscal 2025, $3,143 thousand for fiscal 2026,$2,172 thousand for fiscal 2027, and $556 thousand for fiscal 2028[89][90] - Non-cancelable purchase commitments as of September 30, 2024, amount to approximately$5.9 million[91] - Future lease payments for facilities and cars total $1,024 thousand, with a present value of$981 thousand after deducting imputed interest of $43 thousand[94] - The company received$2.8 million in funding from the Israel Innovation Authority (IIA), with $1.6 million being royalty-bearing grants,$400 thousand in convertible preferred shares, and $806 thousand without future obligation[95] - Royalties paid to the IIA as of September 30, 2024, total$114 thousand, with royalty expenses of $2 thousand for the three and nine months ended September 30, 2024[96] - The company's contingent liability to the IIA amounts to$1.6 million as of September 30, 2024[97] - Royalty payments for the three and nine months ended September 30, 2024, were $0 and$55 thousand, respectively, compared to $31 thousand for the limited consolidation period ended September 30, 2023[101] - The company has pledged$361 thousand as security for a guarantee granted to a third party, which cannot be withdrawn without the third party's consent[102] Shareholder and Equity Information - Net loss per ordinary share for the nine months ended September 30, 2024, was $1.58, compared to$1.94 for the same period in 2023[19] - The company's reverse share split reduced the number of issued and outstanding ordinary shares from approximately 60.1 million to 8.6 million, with a total authorized number of ordinary shares adjusted to 25 million post-split[105] - As of September 30, 2024, there were $1.7 million of total unrecognized compensation costs related to non-vested share-based compensation arrangements, expected to be recognized over approximately 2.3 years[113] - The company repurchased a total of 574,658 ordinary shares at a cost of$3.5 million under its share repurchase program as of September 30, 2024[118] - Total warrants outstanding and exercisable as of September 30, 2024 were 2,498,574 with exercise prices ranging from $8.75 to$52.50 per share[119] - Share-based compensation expenses totaled $1.047 million for the nine months ended September 30, 2024, up from$955,000 in the same period of 2023[130] - The company repurchased 574,658 ordinary shares at a total cost of $3.5 million under the share repurchase program as of September 30, 2024[187] Product and Market Information - The company specializes in medical devices, including the ReWalk Personal and ReWalk Rehabilitation Exoskeleton devices for individuals with spinal cord injury[26] - The company's product offerings include ReWalk Personal, ReWalk Rehabilitation, ReStore, MyoCycle, and AlterG Anti-Gravity systems[58] - ReWalk Personal and ReWalk Rehabilitation products are designed for paraplegic individuals, with ReWalk Rehabilitation offering adjustable parts for clinical use[60] - Medicare reimbursement pathway established for ReWalk products, with variable consideration reassessed at each reporting period[61] - AlterG Anti-Gravity systems used in physical and neurological rehabilitation, with rental revenue accounted for under ASC Topic 842[62][63] - SCI Products offered in a rent-to-purchase model, with service revenue recorded as services are rendered[64] - SCI Products include a five-year warranty, with the first two years as assurance type and the remaining as service type warranty[66] - The company received FDA 510(k) clearance for the ReWalk Personal Exoskeleton with stair and curb functionality in March 2023, expanding its usage in real-world environments[138] - The company submitted a 510(k) premarket notification for the ReWalk 7 Personal Exoskeleton in June 2024, which is pending FDA review[138] - The AlterG anti-gravity systems are utilized in over 4,000 facilities globally across more than 40 countries[140] - CMS established a final lump-sum Medicare purchase fee schedule amount of$91,032 for personal exoskeletons (HCPCS code K1007) in April 2024[146] - The company launched the AlterG NEO, which has generated orders for approximately 40 units since its introduction in June 2024[150] - The company is in the research stage of ReBoot, a personal soft exo-suit for post-stroke individuals, which received FDA Breakthrough Device Designation in November 2021[141] Geographic and Customer Revenue - Total revenues for the nine months ended September 30, 2024 were $18.118 million, with the United States contributing$11.054 million (61% of total)[134] - Europe accounted for $5.896 million (32.5$2.162 million as of September 30, 2024 from $3.123 million at December 31, 2023, with the largest portion located in the United States ($1.777 million)[134] - The company expects to save approximately $3 million in operating expenses and improve gross margins by approximately two percentage points through the integration of AlterG and the closure of two U.S. facilities[148] - The company's public float was below$75 million as of February 27, 2024, limiting primary securities offerings to no more than one-third of their public float in any 12-month period[185] - The company's collaboration agreement with Harvard concluded on March 31, 2022, with all product development milestones met as of September 30, 2024[191] - The company had no off-balance sheet arrangements or guarantees of third-party obligations as of September 30, 2024[193] - There were no material changes to the company's market risk during the third quarter of 2024[194]