ReWalk(RWLK) - 2025 Q1 - Quarterly Report

PART I FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS Unaudited Q1 2025 financials show a $4.8 million net loss and $5.5 million negative operating cash flow, raising going concern doubts - The company's financial position as of March 31, 2025, with a cash balance of $5.7 million, a quarterly net loss of $4.8 million, and negative operating cash flow of $5.5 million, raises substantial doubt about its ability to continue as a going concern[31] - A one-for-seven reverse share split became effective on March 15, 2024, with all share and per-share data retroactively adjusted[84] Condensed Consolidated Balance Sheets As of March 31, 2025, total assets decreased to $28.8 million from $30.5 million, driven by reduced cash and cash equivalents Condensed Consolidated Balance Sheet Data (in thousands) | Account | March 31, 2025 (unaudited) | December 31, 2024 | | :--- | :--- | :--- | | Assets | | | | Cash and cash equivalents | $5,728 | $6,746 | | Trade receivables, net | $5,165 | $6,004 | | Inventories | $6,802 | $6,723 | | Goodwill | $7,538 | $7,538 | | Total Assets | $28,809 | $30,487 | | Liabilities & Equity | | | | Trade payables | $4,466 | $5,022 | | Total current liabilities | $9,071 | $10,225 | | Total liabilities | $10,353 | $11,638 | | Accumulated deficit | ($269,659) | ($264,825) | | Total shareholders' equity | $18,456 | $18,849 | Condensed Consolidated Statements of Operations Q1 2025 revenues were $5.0 million, with gross profit improving to $2.1 million and net loss narrowing to $4.8 million Condensed Consolidated Statements of Operations (in thousands, except per share data) | Metric | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :--- | :--- | :--- | | Revenues | $5,034 | $5,283 | | Gross Profit | $2,122 | $1,395 | | Total Operating Expenses | $6,975 | $7,897 | | Operating Loss | ($4,853) | ($6,502) | | Net Loss | ($4,834) | ($6,276) | | Net Loss Per Share (basic and diluted) | ($0.46) | ($0.73) | Condensed Consolidated Statements of Cash Flows Q1 2025 net cash used in operations improved to $5.5 million, offset by $4.5 million from financing activities, resulting in a $1.0 million cash decrease Condensed Consolidated Statements of Cash Flows (in thousands) | Cash Flow Activity | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :--- | :--- | :--- | | Net cash used in operating activities | ($5,493) | ($7,673) | | Net cash used in investing activities | ($5) | $0 | | Net cash provided by financing activities | $4,471 | $0 | | Decrease in cash, cash equivalents, and restricted cash | ($1,020) | ($7,688) | Notes to Condensed Consolidated Financial Statements Notes detail accounting policies, revenue breakdown, $7.5 million goodwill, $6.6 million purchase obligations, and a $4.2 million January 2025 equity raise Disaggregation of Revenues (in thousands) | Revenue Type | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :--- | :--- | :--- | | Product | $3,726 | $3,739 | | Rental | $460 | $886 | | Service and warranty | $848 | $658 | | Total Revenues | $5,034 | $5,283 | - The company has $7.5 million of goodwill from its 2023 acquisition of LCAI (formerly AlterG), with all other acquired intangible assets fully impaired as of December 31, 2024[72][73] - As of March 31, 2025, the company had non-cancelable purchase obligations of approximately $6.6 million[75] - In January 2025, the company raised approximately $4.2 million in net proceeds through the issuance of ordinary shares and associated warrants[22][93] ITEM 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses Q1 2025 performance, noting a 4.7% revenue decrease to $5.0 million, improved gross margin to 42.2%, and narrowed operating loss, alongside liquidity concerns Overview and Business Highlights Lifeward launched ReWalk 7 in Q1 2025, secured first commercial insurance approval, expanded partnerships, and achieved a $91,032 Medicare reimbursement milestone - In Q1 2025, the company launched the ReWalk 7, achieved the first approval from a major U.S. commercial health insurer for the device, and partnered with CorLife for workers' compensation claims[119] - The company finalized an agreement with BARMER, Germany's second-largest statutory health insurer, to streamline access to ReWalk exoskeletons for its 8.5 million beneficiaries[119] - A significant reimbursement milestone was achieved when CMS established a final lump-sum Medicare purchase fee of $91,032 for personal exoskeletons, effective January 1, 2024[112][113] Results of Operations Q1 2025 revenue decreased 4.7% to $5.0 million, while gross profit increased to $2.1 million (42.2% margin), and operating expenses declined Comparison of Operating Results (in thousands) | Metric | Q1 2025 | Q1 2024 | Change (%) | | :--- | :--- | :--- | :--- | | Revenue | $5,034 | $5,283 | (4.7%) | | Gross Profit | $2,122 | $1,395 | 52.1% | | R&D Expenses, net | $918 | $1,291 | (28.8%) | | Sales & Marketing Expenses | $3,837 | $5,014 | (23.5%) | | General & Administrative | $2,220 | $1,592 | 39.5% | | Operating Loss | ($4,853) | ($6,502) | (25.4%) | - The increase in gross profit margin to 42.2% was driven by lower production costs and no intangible asset amortization in Q1 2025, compared to $0.4 million in Q1 2024[124][125] - The decrease in R&D expenses was primarily due to the completion of development programs for the ReWalk 7 and AlterG NEO[127] - The increase in G&A expenses was driven by a $0.3 million bad debt expense and the absence of a $0.5 million net benefit recognized in Q1 2024 related to the AlterG acquisition[132] Liquidity and Capital Resources The company faces significant liquidity concerns with $5.7 million cash and $5.5 million negative operating cash flow, despite a $4.5 million equity raise and new ATM program - As of March 31, 2025, the company had $5.7 million in cash and cash equivalents and an accumulated deficit of $269.7 million, raising substantial doubt about its ability to continue as a going concern[139] - In January 2025, the company closed a registered direct offering, raising net proceeds of approximately $4.5 million[146][151] - In March 2025, the company entered into an at-the-market (ATM) offering agreement to sell up to $5.5 million of its ordinary shares, with approximately $0.5 million sold subsequent to quarter-end[101][147] Contractual Obligations as of March 31, 2025 (in thousands) | Obligation Type | Total | Less than 1 year | 1-3 years | | :--- | :--- | :--- | :--- | | Purchase obligations | $6,628 | $6,628 | $ - | | Operating lease obligations | $650 | $591 | $59 | | Earnout liability | $608 | $608 | $ - | | Total | $7,921 | $7,862 | $59 | ITEM 3. Quantitative and Qualitative Disclosures About Market Risk No material changes to the company's market risk exposure have occurred since the 2024 Form 10-K filing - There have been no material changes to the company's market risk since the 2024 Form 10-K filing[158] ITEM 4. Controls and Procedures Management concluded disclosure controls and procedures were effective as of March 31, 2025, with no material changes to internal control over financial reporting - The CEO and CFO concluded that the company's disclosure controls and procedures were effective as of March 31, 2025[160] - No changes occurred during the quarter ended March 31, 2025, that materially affected, or are reasonably likely to materially affect, the company's internal control over financial reporting[161] PART II OTHER INFORMATION ITEM 1. Legal Proceedings No material changes to the company's legal proceedings have occurred since the 2024 Form 10-K disclosure - There have been no material changes to the company's legal proceedings from what was disclosed in the 2024 Form 10-K[164] ITEM 1A. Risk Factors The company faces material risks from tariffs and trade barriers, potentially increasing costs and negatively impacting demand and profitability - The company's business may be materially and adversely affected by tariffs and trade barriers, as it relies on foreign third-party manufacturers and suppliers in countries like China, Taiwan, and Israel[165] - These tariffs may force price increases, negatively impacting product demand and competitive positioning, and potentially reducing margins and profitability if costs are not fully recovered[165][166] ITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds This item is not applicable for the current reporting period - Not applicable[168] ITEM 5. Other Information No directors or officers adopted or terminated a Rule 10b5-1 trading arrangement during Q1 2025 - No directors or officers adopted or terminated a Rule 10b5-1 trading arrangement during the first quarter of 2025[171] ITEM 6. Exhibits This section lists exhibits filed with the Form 10-Q, including documents for the January 2025 offering and March 2025 ATM agreement - Exhibits filed include documents related to the January 2025 registered direct offering and the March 2025 At-The-Market (ATM) agreement[173]