Lifeward Ltd. Q3 FY2024 earnings call

Business Introduction

• Lifeward has two primary businesses: one focused on ReWalk exoskeleton for spinal cord injury individuals, and the other AlterG anti-gravity technology for injury recovery, neuro disorder treatment, etc.

Case Examples

• A patient regained walking with ReWalk, improving health outcomes like pain reduction and social functioning. Another patient used AlterG to reduce weight for knee surgery.

Quarterly Progress

• U.S. leads for ReWalk expanded 62% over prior year due to expanded coverage. AlterG ended Q3 with 74 systems in backlog, sequential increase for three quarters.

Key Developments

• ReWalk 7-0 system under FDA review, expected to get clearance in early 2025. AlterG's new NEO product has 40 orders.

Operational Efficiency

• Closed two facilities, adjusted operating expenses in Q3 were $6.7 million, the lowest in previous five quarters.

In the third quarter of 2024, Lifeward's revenue was $6.1 million. Revenue from traditional products and services including ReWalk exoskeletons, etc. was $2.5 million, up 73% from the prior year quarter, driven by increased ReWalk system revenue in the U.S. and Germany. Revenue from AlterG products was $3.6 million, an increase from the third quarter of 2023 when AlterG was acquired. ReWalk contributed approximately 41% of the revenue ($2.5M/$6.1M) and AlterG contributed approximately 59% ($3.6M/$6.1M).

• Revised 2024 full-year revenue expectation to $25 million to $26 million.
• Expect sequential revenue growth to resume in Q4, aiming for highest quarterly revenue of the year.
• AlterG is expected to have a good Q4, contributing to recovery.

• CMS claims review and approval process is time-consuming, averaging 150 days for 2024 claims, impacting payment timing.
• Softness in capital spending by clinics in the U.S. impacts AlterG sales.
• Claims documentation is complex, requiring multiple rounds of supplemental information which delays processing.

Q: How comfortable are you with the 2024 guidance and CMS claims processing?

A: We are comfortable with the guidance. CMS processing is taking longer than expected, averaging about 150 days for 2024 claims, and claims documentation is complex with back-and-forth for supplemental info.

Q: Is there any possibility of a positive surprise in AlterG business?

A: AlterG is improving quarter-over-quarter, new NEO product has 40 orders, and we expect a good Q4, so there is potential for positive surprise.

Q: How many quarters to attain profitability based on current business run?

A: ReWalk growth is the primary driver, AlterG will recover, and with current trends, we expect to reach profitability within a reasonable time frame depending on uptake.

Q: What will Q4 cash burn look like?

A: Q4 cash burn will come down significantly from Q3, but is affected by Medicare payments which are not fully visible. However, with higher revenue and improved operational expenses, there will be good improvement.

Q: Number of Part B patients among ReWalk new patients?

A: Not disclosed as we haven't been covering different sales areas.

Q: Comparison of AlterG in Q4 with last year's Q4?

A: AlterG will have a good Q4 and is recovering nicely, expected to be better than last year's Q4.

Q: Supplemental insurance payment situation?

A: Supplemental insurance payment is contingent on Medicare claim review and processing being completed first, currently in the same process as Medicare claims.

Q:追溯Medicare应收账款情况？ A: Claims started after April 2024, expect all approved claims to be paid eventually, and no immediate write-off risk in the short term.

Q: Is there a checklist for reimbursement process?

A: We've made significant progress, understand CMS requirements and have adjusted our system, but CMS is still learning at the same time.