Lifeward Ltd. Q4 FY2024 earnings call

• 2024 was a year of meaningful achievement with milestones like establishment of lump sum payment with CMS in Q1, $91,032 CMS price for ReWalk system in Q2, contract with BARMER in Germany, new coverage in Hungary, etc. - 2025 focus is on maintaining growth, reducing quarterly operating loss, with targets like growth in workers' compensation placements, MyoCycle penetration, AlterG national accounts. - Operational efforts include closing 2 locations, reducing headcount by 35%, launching new AlterG NEO product, completing FDA studies for ReWalk 7.

In the fourth quarter of 2024, Lifeward reported revenue of $7.5 million, compared to $6.9 million in the corresponding quarter of 2023. For the full year 2024, revenue was $25.7 million, an 85% increase from 2023. Revenue from AlterG products and services was $5.5 million in Q4 2024, the highest quarterly revenue since acquisition in August 2023. Revenue from traditional products and services (ReWalk's exoskeletons, Myocycles, etc.) was $2.0 million in Q4 2024. GAAP gross margin in Q4 2024 was 24.4% vs. 35.5% in Q4 2023. Non-GAAP adjusted gross margin was 45.4% of revenue in Q4 2024 vs. 46.9% in Q4 2023. GAAP operating expenses in Q4 2024 were $17.1 million vs. $8.6 million in Q4 2023. Non-GAAP adjusted operating expenses were $6.7 million in Q4 2024 vs. $7 million in Q4 2023.

For 2025, Lifeward expects full year revenue in the range of $28 million to $30 million with adjusted gross margin between 47% to 49%. Full year non-GAAP operating expenses expected to be $22 million to $23 million, down from $27.5 million in 2024. Full year non-GAAP operating loss expected $7 million to $9 million. First quarter is seasonally lowest revenue quarter with highest operating expenses, but subsequent quarters expected to grow sequentially. By Q4 2025, adjusted operating loss anticipated to be approximately $1 million.

Auditors gave a going concern qualification in 2024 audit process, reflecting concern over adequacy of balance sheet to fund business. Lifeward is addressing this by initiating sustainable growth plan, putting in place ATM facility, and exploring other nondilutive or minimally dilutive alternatives.

Q: For the 2025 guidance, how do you see the growth of each component and is the guidance generally more conservative or you think that's okay?

A: For the most part, the guidance reflects across the board growth across three major product lines. MyoCycles are smallest contributor now but likely to show biggest percentage growth due to expanded distribution agreement. Growth in ReWalk is concentrated on segments with quicker payment and higher return. Across the board growth in all three product lines expected, more profitable and efficient growth.

Q: What do you think the impact of the CorLife partnership may have on the worker compensation part, it's just a smooth -- to increase the process, reduce the cost or maybe even increase the lead?

A: The CorLife program is very important as it gives access to a large and attractive segment. They can process cases efficiently, reducing our expense and resource needs. It's a great opportunity to have a much larger conduit into workers' compensation and we'll get paid in reasonable cycle. The workman's compensation market is about 6% of all spinal cord injuries and we didn't have access to it before. The contract is favorable financially both for us and CorLife.

Q: Is there anything specific that you can point to regarding patient attrition for ReWalk?

A: It was a combination of seasonal factors. Some were deferrals due to clinics being busy around holidays or patients having minor issues. They weren't necessarily lost patients but just deferrals not unusual in the patient population.

Q: Based on your experience with the reimbursements from the Medicare programs, what are the learnings that you have got into so far? And do you think the cycle, the reimbursement cycle is smooth as of now? And how are you taking this information to the private payers when you're discussing for reimbursement from them?

A: The cycle with Medicare groups has been longer than expected but we anticipate it will shorten. We've learned the quality of the package for commercial payers is extensive. With CMS, we have enough data and they're processing more quickly on the commercial side. We anticipate CMS will get more efficient as they know the products. The path for commercial side seems shorter.