ReWalk(LFWD) - 2023 Q4 - Annual Results

Company Overview & Highlights Lifeward (formerly ReWalk Robotics Ltd.) completed commercial and operational integration, rebranded as Lifeward, aiming to elevate rehabilitation care standards through innovative solutions, expecting growth in 2024, especially benefiting from Medicare reimbursement for exoskeletons Executive Summary & Strategic Vision Lifeward completed organizational integration, ready to execute its strategy, and plans to expand ReWalk exoskeleton coverage for spinal cord injury patients by leveraging the new Medicare exoskeleton benefit category - Lifeward has completed organizational integration, preparing to execute its strategy and leverage the newly established Medicare exoskeleton benefit category to expand ReWalk exoskeleton coverage for spinal cord injury patients[3] - The company has completed the integration of commercial and operational resources of the former ReWalk and AlterG businesses, expecting $3 million in annual net savings in 2024[4] - The company launched its new corporate brand, Lifeward, to reflect its broader mission of elevating care standards in overcoming physical limitations and disabilities[4] Key Highlights of Q4 2023 and Early 2024 Lifeward achieved record annual revenue in 2023, completed commercial and operational integration, and successfully launched its new brand, while CMS finalized the 2024 home health rule to include exoskeletons in Medicare brace benefits and is determining initial reimbursement levels for ReWalk personal exoskeletons 2023 Annual Revenue | Metric | 2023 (Millions USD) | 2022 (Millions USD) | Growth Rate | | :--- | :--- | :--- | :--- | | Annual Revenue | 13.9 | 5.5 | 151% | - The company completed the integration of commercial and operational resources of the former ReWalk and AlterG businesses, expecting $3 million in annual net savings in 2024[4] - The Centers for Medicare & Medicaid Services (CMS) finalized the 2024 home health rule, including exoskeletons in the Medicare brace benefit category, effective January 1, 2024[4] Financial Results Lifeward's financial performance in Q4 2023 showed significant revenue growth, but GAAP gross margin declined, and operating and net losses widened, though non-GAAP adjusted losses improved Fourth Quarter 2023 Financial Performance Lifeward achieved significant revenue growth in Q4 2023, but GAAP gross margin decreased, and operating and net losses expanded, while non-GAAP adjusted operating and net losses improved Revenue Analysis Total revenue reached $6.9 million in Q4 2023, a 216% year-over-year increase, primarily driven by $4.7 million contributed by the AlterG business acquired in August 2023 Q4 2023 Revenue | Metric | Q4 2023 (Millions USD) | Q4 2022 (Millions USD) | Change (Millions USD) | Growth Rate | | :--- | :--- | :--- | :--- | :--- | | Total Revenue | 6.9 | 2.2 | 4.7 | 216% | | Original ReWalk Business Revenue | 2.2 | 2.2 | 0 | 0% | | AlterG Business Contribution | 4.7 | - | 4.7 | - | Gross Margin GAAP gross margin for Q4 2023 was 35.5%, an increase from the prior year, while non-GAAP adjusted gross margin was 47.0%, a 5.8 percentage point decrease year-over-year, mainly due to a less favorable product sales mix and material costs as a percentage of revenue in the prior year Q4 2023 Gross Margin | Metric | Q4 2023 | Q4 2022 | Change | | :--- | :--- | :--- | :--- | | GAAP Gross Margin | 35.5% | 30.9% | +4.6 percentage points | | Non-GAAP Adjusted Gross Margin | 47.0% | 52.8% | -5.8 percentage points | Operating Expenses and Loss Total operating expenses in Q4 2023 were $8.6 million, with AlterG contributing $3.2 million, resulting in a GAAP operating loss of $6.1 million, while non-GAAP adjusted operating loss improved by 6% to $3.8 million Q4 2023 Operating Expenses and Loss | Metric | Q4 2023 (Millions USD) | Q4 2022 (Millions USD) | Change (Millions USD) | Change Rate | | :--- | :--- | :--- | :--- | :--- | | Total Operating Expenses | 8.6 | 5.7 | 2.9 | 50.9% | | AlterG Contribution to Operating Expenses | 3.2 | - | - | - | | GAAP Operating Loss | (6.1) | (5.0) | (1.1) | 22% | | Non-GAAP Adjusted Operating Loss | (3.8) | (4.0) | 0.2 | -6% | Net Loss and EPS GAAP net loss for Q4 2023 was $5.6 million, or $0.13 per share, while non-GAAP adjusted net loss improved to $3.3 million, or $0.05 per share Q4 2023 Net Loss and EPS | Metric | Q4 2023 | Q4 2022 | Change | | :--- | :--- | :--- | :--- | | GAAP Net Loss (Millions USD) | (5.6) | (5.3) | (0.3) | | GAAP EPS | (0.13) | (0.09) | (0.04) | | Non-GAAP Adjusted Net Loss (Millions USD) | (3.3) | (4.3) | 1.0 | | Non-GAAP Adjusted EPS | (0.05) | (0.07) | 0.02 | Liquidity As of December 31, 2023, Lifeward held $28.1 million in unrestricted cash and cash equivalents with no debt, and cash outflow from operating activities was $4.4 million in Q4 Liquidity as of December 31, 2023 | Metric | Amount (Millions USD) | | :--- | :--- | | Unrestricted Cash and Cash Equivalents | 28.1 | | Debt | 0 | | Cash Used in Operating Activities in Q4 | 4.4 | Financial Guidance Lifeward projects full-year 2024 revenue between $28 million and $32 million, with non-GAAP gross margin expanding to over 40% and non-GAAP operating loss decreasing to low double-digit millions, while Q1 2024 revenue is expected to be $5 million to $5.5 million, excluding Medicare revenue 2024 Financial Guidance | Metric | Full-Year 2024 Guidance | Q1 2024 Guidance | | :--- | :--- | :--- | | Revenue | $28 million to $32 million | $5 million to $5.5 million | | Non-GAAP Gross Margin | Above 40% | - | | Non-GAAP Operating Loss | Low double-digit millions | - | - The company expects Q1 revenue to increase in subsequent quarters, consistent with historical patterns, benefiting from the gradual implementation of Medicare revenue and anticipated mid-year contributions from new AlterG products[11] - Lifeward does not provide a GAAP reconciliation for non-GAAP financial guidance because the company cannot reasonably determine and without unreasonable effort predict the items included in the reconciliation, such as share-based compensation expense, acquisition-related expenses, and contingent consideration expenses[12] Corporate Information This section provides details on Lifeward's upcoming Q4 and full-year 2023 earnings conference call, an overview of the company's mission and product portfolio, and important disclaimers regarding forward-looking statements and non-GAAP financial measures Conference Call Details Lifeward management will host a Q4 and full-year 2023 earnings conference call on Tuesday, February 27, 2024, at 8:30 AM ET, providing dial-in numbers for the US, international, Israel, and Germany, along with a webcast link Conference Call Information | Date | Tuesday, February 27, 2024 | | :--- | :--- | | Time | 8:30 AM ET | | US Dial-in | 1-833-316-0561 | | International Dial-in | 1-412-317-0690 | | Access Code | Lifeward Earnings Call | | Webcast | https://edge.media-server.com/mmc/p/3pun37to/ | About Lifeward Lifeward designs, develops, and commercializes life-changing solutions across the continuum of physical rehabilitation and recovery, empowering individuals with physical limitations or disabilities through innovative products, including ReWalk exoskeletons, AlterG anti-gravity systems, ReStore exoskeleton suits, and MyoCycle FES systems - Lifeward designs, develops, and commercializes life-changing solutions across the continuum of physical rehabilitation and recovery, providing proven functional and health benefits in clinical settings, homes, and communities[14] - Lifeward's product portfolio includes ReWalk exoskeletons, AlterG anti-gravity systems, ReStore exoskeleton suits, and MyoCycle FES systems[14] - Founded in 2001, Lifeward operates in the United States, Israel, and Germany[15] Forward-Looking Statements This press release contains forward-looking statements, including projections of the company's future performance and non-historical facts, which are based on management's current expectations and subject to uncertainties, risks, and changing circumstances that could cause actual results to differ materially - Forward-looking statements may include projections of the company's future performance and may be identified by words such as "anticipate," "assume," "believe," "continue," "could," "estimate," "expect," "intend," "may," "plan," "potential," "predict," "project," "future," "will," "should," "would," "seek," or similar phrases[17] - Important factors that could cause the company's actual results to differ materially from forward-looking statements include: the ability to realize the anticipated benefits of the AlterG acquisition, the ability to retain customers and key personnel, relationships with suppliers and distributors, uncertainties of future clinical trials, sufficiency of funding, Nasdaq listing compliance, product market acceptance, third-party payer reimbursement capabilities, limited operating history, clinical research programs, future growth, supply chain, product improvements and development, medical device reporting regulation compliance, regulatory approvals, intellectual property protection, cybersecurity risks, and the use of proceeds from securities offerings[17] Non-GAAP Financial Measures Explanation The company uses non-GAAP financial measures, including non-GAAP gross margin, operating expenses, operating loss, and net loss, to supplement its GAAP financial statements, believing these metrics help investors understand ongoing business performance, but emphasizes they should not be considered substitutes for GAAP measures and may not be comparable to non-GAAP measures used by other companies - The company believes the use of non-GAAP financial measures, including non-GAAP gross margin, operating expenses, operating loss, and net loss, is helpful to investors because these measures exclude certain significant items that may not be representative of or related to the results of ongoing business operations[18][19] - Non-GAAP financial data are not measures of the company's financial performance under US GAAP and should not be considered as alternatives to operating loss or net loss or any other performance measures derived in accordance with GAAP[19] - Non-GAAP financial measures may not provide information directly comparable to that provided by other companies in Lifeward's industry, as other companies may calculate non-GAAP financial results differently, particularly with respect to non-recurring, unusual items[19] Condensed Consolidated Financial Statements This section presents Lifeward Robotics Ltd. and its subsidiaries' audited condensed consolidated financial statements, including statements of operations, non-GAAP reconciliations, balance sheets, and cash flow statements, along with revenue by geographic region Statements of Operations This section provides Lifeward Robotics Ltd. and its subsidiaries' audited condensed consolidated statements of operations, detailing revenue, cost of sales, gross profit, operating expenses, operating loss, net loss, and basic net loss per share for the three and twelve months ended December 31, 2023, and 2022 Condensed Consolidated Statements of Operations (Excerpt) | Metric (Thousands USD) | Q4 2023 | Q4 2022 | Full-Year 2023 | Full-Year 2022 | | :--- | :--- | :--- | :--- | :--- | | Revenue | 6,884 | 2,179 | 13,854 | 5,511 | | Cost of Sales | 4,441 | 1,506 | 9,401 | 3,606 | | Gross Profit | 2,443 | 673 | 4,453 | 1,905 | | Operating Expenses | 8,580 | 5,678 | 28,065 | 21,007 | | Operating Loss | (6,137) | (5,005) | (23,612) | (19,102) | | Net Loss | (5,639) | (5,313) | (22,133) | (19,569) | | Basic Net Loss Per Share | (0.13) | (0.09) | (0.37) | (0.31) | Non-GAAP Reconciliations This section provides reconciliations of GAAP net loss, operating loss, gross profit, research and development expenses, sales and marketing expenses, and general and administrative expenses to their corresponding non-GAAP measures, detailing adjustments such as the impact of acquisition accounting on inventory, intangible asset amortization, M&A transaction and integration costs, rebranding, restructuring, contingent consideration income/expense, inventory impairment, and share-based compensation expense Reconciliation of GAAP Net Loss to Non-GAAP Net Loss (Excerpt) | Metric (Thousands USD) | Q4 2023 | Q4 2022 | Full-Year 2023 | Full-Year 2022 | | :--- | :--- | :--- | :--- | :--- | | GAAP Net Loss | (5,639) | (5,313) | (22,133) | (19,569) | | Total Adjustments | 2,343 | 968 | 7,066 | 1,614 | | Non-GAAP Net Loss | (3,296) | (4,345) | (15,067) | (17,955) | | Non-GAAP EPS | (0.05) | (0.07) | (0.25) | (0.29) | Reconciliation of GAAP Operating Loss to Non-GAAP Operating Loss (Excerpt) | Metric (Thousands USD) | Q4 2023 | Q4 2022 | Full-Year 2023 | Full-Year 2022 | | :--- | :--- | :--- | :--- | :--- | | GAAP Operating Loss | (6,137) | (5,005) | (23,612) | (19,102) | | Total Adjustments | 2,343 | 968 | 7,066 | 1,614 | | Non-GAAP Operating Loss | (3,794) | (4,037) | (16,546) | (17,488) | Reconciliation of GAAP Gross Profit to Non-GAAP Gross Profit (Excerpt) | Metric (Thousands USD) | Q4 2023 | Q4 2022 | Full-Year 2023 | Full-Year 2022 | | :--- | :--- | :--- | :--- | :--- | | GAAP Gross Profit | 2,443 | 673 | 4,453 | 1,905 | | Total Adjustments | 783 | 477 | 1,006 | 487 | | Non-GAAP Gross Profit | 3,226 | 1,150 | 6,359 | 2,392 | Balance Sheets This section provides Lifeward Robotics Ltd. and its subsidiaries' audited condensed consolidated balance sheets, detailing assets, liabilities, and stockholders' equity as of December 31, 2023, and 2022 Condensed Consolidated Balance Sheets (Excerpt) | Metric (Thousands USD) | December 31, 2023 | December 31, 2022 | | :--- | :--- | :--- | | Assets | | | | Cash and Cash Equivalents | 28,083 | 67,896 | | Total Current Assets | 39,222 | 72,510 | | Intangible Assets | 12,525 | - | | Goodwill | 7,538 | - | | Total Assets | 63,192 | 74,236 | | Liabilities and Equity | | | | Total Current Liabilities | 11,795 | 4,782 | | Contingent Consideration Liability | 3,292 | - | | Stockholders' Equity | 46,510 | 68,165 | | Total Liabilities and Equity | 63,192 | 74,236 | Statements of Cash Flows This section provides Lifeward Robotics Ltd. and its subsidiaries' audited condensed consolidated statements of cash flows, detailing cash flows from operating, investing, and financing activities for the twelve months ended December 31, 2023, and 2022 Condensed Consolidated Statements of Cash Flows (Excerpt) | Metric (Thousands USD) | Full-Year 2023 | Full-Year 2022 | | :--- | :--- | :--- | | Net Cash Used in Operating Activities | (20,667) | (17,891) | | Net Cash Used in Investing Activities | (18,149) | (25) | | Net Cash Used in Financing Activities | (992) | (2,500) | | Decrease in Cash, Cash Equivalents, and Restricted Cash | (39,763) | (20,495) | | Cash, Cash Equivalents, and Restricted Cash at End of Period | 28,792 | 68,555 | Revenue by Geographic Region This section details Lifeward Robotics Ltd. and its subsidiaries' revenue by geographic region, including the United States, Europe, Asia Pacific, and Rest of World, for the three and twelve months ended December 31, 2023, and 2022 Revenue by Geographic Region (Thousands USD) | Region | Q4 2023 | Q4 2022 | Full-Year 2023 | Full-Year 2022 | | :--- | :--- | :--- | :--- | :--- | | United States | 3,338 | 1,110 | 7,636 | 2,303 | | Europe | 2,843 | 1,034 | 5,044 | 3,057 | | Asia Pacific | 264 | 2 | 387 | 115 | | Rest of World | 439 | 33 | 787 | 36 | | Total Revenue | 6,884 | 2,179 | 13,854 | 5,511 |