Q1 2021 Rewalk Robotics Ltd Earnings Call
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Good day and thank you for standing by welcome to the Q1 2021 re walk Robotics Ltd earnings Conference call. At this time, all participants are in a listen only mode. After the speaker's presentation. There will be a question and answer session to ask a question. During the session you need to press star one on.
On your telephone.
If you require any further assistance. Please press star zero I would now like to hand, the conference over to your speaker of today Ori Gon. Please go ahead.
Thank you and me.
Good morning, and welcome to the rework Robotics first quarter 2021, and earnings call, which is already gone and we will chief financial Officer, and with me on today's call it Leverages and ski our.
Our Chief Executive Officer.
This morning, and the company issued the press release detailing financial results for the three months ended March 30, <unk> 2021 of.
This press release and the webcast of this call can be accessed through the Investor Relations section of the reward website at www dot reward the call.
Before we get started I would like to remind everyone that any statements made on today's conference call that express the belief expectation projection forecast anticipation or intent regarding future events and the company's future performance may be considered forward looking statements as defined by the private securities litigation of the format. These forward looking statements on based on the.
Formation of elements of reward management as of today and involve risks and uncertainties.
And those noted in this morning's press release and the reworks filing with the SEC such forward looking statements are not guarantees of future performance.
Actual results may differ materially from those projected and forward looking statements and he looked specifically disclaims any intent or obligation to update these forward looking statements except as required by law.
Telephone replay of the quota will be available shortly after the completion of this quote you will find the diet and inflammation and today's press release the outside of webcast will be available on on the company's web site.
For the benefit of those who may be listening to the replay or archived webcast. This call was held and recorded on May 11, 2021. Since then and we work may have made the announcements related to the topics discussed. So please reference the company's most recent press releases and SEC filings.
And we debt I'll turn the call over to <unk> CEO, Larry just and skew the alright.
Alright, Thank you very much.
Good morning, everyone I am pleased to report and we had a solid Q1 and are on track for our goals in 2021.
And in Q1 was the beginning of the transition from COVID-19 limitations to more normal operations and sorry.
The customer base is making progress towards returning to training and into the clinics.
Q1 sales were 1.316 million compared to <unk>.
760 million and the prior year quarter, and $1 2 million.
And the trailing quarter.
For our core product offering the reward six we know we expect continued progress with our current base of target candidates, which is at 168 qualified individuals at this time.
82 of those are in Germany, where we had the strongest coverage position as we emerge from COVID-19.
56 are in the U S, which consists primarily of VA and workman's comp individuals'.
30, or and the U K and within their litigation system.
And as you as progress occurs with CMS, and we will seek to move larger numbers of Medicare and Medicaid individuals into our qualified pipeline.
The current base of potential <unk> and.
And bind with our full direct sales force of these three geographies.
And the expected reopening for access to these training centers and provides us with the sufficient base to meet our year over year growth goals.
For the restore the product offering the reopening and has allowed the expansion of data generation and reentry into target accounts.
We have worked with several of our Kols to develop a symposium for this years ACR and conference, which examines the role of robotic systems like the restore exo suit and achieving the therapeutic goals of high intensity gait training with patients post stroke.
The reopening will allow re initiating the clinical studies and Spalding and Boston, the abilities lab, and Chicago and at Boston University.
Our parallel focus to build and data is initiate and placements and.
And seeking subsequent contracts with national chains of our accounts.
We now have seven clinics with four different national groups that are utilizing the restore device for broader use within their national programs.
We are also advancing contract efforts with our mile and offering intermediate such operating with the same change and others.
Our expectations for year over year growth.
And is on ongoing and increasing access to our clinics and customer base and.
And all of current trends and the U S UK and Germany support our expectation to meet our growth goals.
All other financial metrics are also aligned with our planet or.
Our gross margin landed at 54% of.
Our operating expenses will be level and almost all efforts beyond sales commission and travel expenses.
Our cash position at the end of the quarter was $67 4 million.
The combination of growth.
Margin management and control the expenses leaves us with the runway to achieve breakeven operations and to consider other opportunities to build our business.
At the start of the year, we identified several key milestones to watch in 2021 that will have an impact on our efforts to develop this new and emerging market.
Here is a review of each.
The first milestone.
And the German federal Social court, which is the highest score for social jurisdiction and Germany, a ruling is expected to decide if and exoskeleton.
Which is an orthopedic aid the replaces the function of legs enables independent walking and standard.
Whether it serves to directly compensate for disability.
This case was filed and the local social court and made 2017 indications Tonight.
It was appealed to the state's social court, which overruled the local court and ruled that a we work must be provided.
It was an appeal by the payer to the highest social court of Germany. The Federal Court for a final ruling.
The core does not provide a specific guideline and the timing for a ruling but our best estimate is mid 2021.
A positive ruling would have the significant impact on the landscape.
I, all Payors and Germany.
Our second milestone.
The expansion of contracts and Germany. They remain highly active with two of the remaining large change the final contracts are more likely to be held until the court decision is issued.
Third milestone.
In the U S. The successful Hick picks code issuance is actively being followed with multiple activities around pricing.
Categorization categorization of the exoskeleton.
And regarding coverage policies with contracted planned in coordination with CMS.
This time line has some uncertainty, but we are pleased with the progress that has been and curve.
And the fourth milestone in the U K the.
The utilization of the restore system and NHS evaluation centers is scheduled with patients and as they return to the clinics on may 17th with a broader opening in June.
I'd now like the total.
And for review of the financial details.
Thanks, Larry.
As mentioned, our first quarter the revenue for 2021 close of $1 3 million compared to $760000, and Q1, 2020, and $1 $2 million and the previous quarter. The increase compared to last year was due to increased number of personnel six point on.
Six point of all units sold in Germany, and the U S.
Regarding our insurance focus this quarter, we had the total of six new interest decisions to place the device for the rental or purchase and seven conversion of previously rented devices. Our current pipeline of active rentals and consist of <unk> person on six point of devices and to restore rentals as Larry mentioned, we have.
Additional active programs with different U S accounts currently analyzing the restore device during the stroke MTA and therapy.
Turning into our gross margins in the.
The first quarter of 2021 of gross margin was 54 per cent compared with 49% and the part of the quarter the increases and mainly due to all of our higher number of two and it's so we'd offset due to higher inventory write offs and proud of Skus for service and warranty.
Regarding the operating expenses, our Q1 2021 operating expenses net of $3 $7 million compared to $4 million in the part of this quarter. These decreases the mainly due to lower R&D spend and we have implemented cost reduction efforts and the beginning of last year with the major we stalled project completed and two adjusted due to the.
COVID-19 impact.
Looking at our operating expenses compared to the previous quarter, we see the day maintenance using our sales and marketing activity, which is almost entirely due to our PPP loan forgiveness, which was booked as a reduction of sales and marketing in the last quarter.
To recap the quarter of the results our net loss for the first quarter of 2021 was $3 1 million.
Compared to a net loss of $3 8 million in the first quarter of 2020.
And is due to our increased revenue and we do expect our non-GAAP net loss for the first quarter of 2021 was $2 8 million compared to $3 $6 million and the first quarter of 2020.
We ended the quarter with $67 4 million and cash which include which includes our $40 million from our February equity fund range and $13 $8 million received from warrant exercises and we.
We debt I'd like to turn the call back to Larry for some final remarks alright.
Thank you Ori.
I'd like to further discuss our status regarding the four major goals, we defined at the start of the year within the context of of our overarching business strategy.
We've laid out of the baseline for year over year growth, where the other with our existing products, which builds on coverage.
Mark and axis of fully active sales team and expansion of data.
We also anticipate our path to be in the sustainable and profitable independent operating entity may require a combination of growth in the base products and.
And successful internal and external development programs.
Technologies, we own and could be and access to combined with our current infrastructure and our current financial position is an ideal mix to achieve these goals.
While most focus is on short term commercial operations, we have active efforts pursuing new indications for our salt and soft exo suit offerings appeared with a parallel payer strategy. We will also examine the new opportunities that fit our operating goals and could benefit and partnership with our organization.
Thank you very much for your time and interest today and I'd like to turn the call all of those two questions at this stage operator, if you could please go ahead of the injunctions.
At this time, if you would like to ask a question press star one on your telephone keypad again that is star and the number one.
And your first question is from Sean Kang with H C. Wainwright.
Hi, Thank you for taking my question.
So my first question is on regarding.
And Johns discretion in our in the states so.
What is the progress you've made.
Regarding debt.
Per the question.
After you got the CMS.
And is there anything else like in terms of the clinical data on the chicken to help the discussion.
Yes. This is Larry Thank you Sean.
Basically we have a lot of interaction occurring with CMS, which is we find incredibly valuable and given us guidance to the answer the open elements to allow of contracting specifically and establishing pricing and establishing a final categorization.
And of establishing a path to contracts. So these three pathways are all underway.
And they're at the stage right now, where theyre, primarily interaction with segments within CMS and.
And with some patients.
So we are in process I guess, there's no specific short term milestone, but really good interaction moving it forward.
Relative to the data we have a very.
And a very solid block of data that we believe will support coverage exactly as it is currently set up.
And that has been successful in Germany, and it's gotten us through the hix ex code issuance.
But we do have additional data and we've outlined some of and in prior calls the VA co Op study, which was 160 patient randomized trial.
Just in the past we have no control over when they publish it but they will publish that sometime in the coming months or so depending on the VA secondarily within our control is we have.
Established a study looking at economic results.
For a patient who has been able to have the ability to walk again compared to a patient.
Or that patient prior to the or walking.
And what effect it had on their health. So we will have more data on a consistent basis around the reward and obviously with the restore as well, but we don't believe they are absolutely necessary for coverage and we think they're very helpful.
I see that's simple.
On one more question from me.
And from the press release of lifestyle of debt your cash position.
You said your cash position could allow you to explore further opportunities for growth was even more of like a more of a general statement or is there any.
That's the big potential project you have in mind.
We I would split that into internally on.
Our success with the programs and Harvard University.
And the associated.
Whoops, they worked with our.
And our products, we would like to move forward with and bring to market. So part of that is development of internal technology that we own specifically targeting the home use of stroke.
Which is a large unmet need for a low cost type system of that type of.
But also we examine every possibility.
And we'll also look at outside possibilities as a pathway if we find something attractive.
I see so home youth sports stroke, so it'll be basically of amused version of restore I guess right.
Well conceptually the same but the the difference would be a much simpler.
The less expensive device that can be easily handled at home by and individuals' restore the product is designed specifically for the clinic and it can help higher volumes of patients who put in X number of patients per day. So it's used repeatedly and has to be set up differently and there's a lot.
The different in terms of durability requirements.
Home use product would be for a single individual at.
At a a much lower cost because you don't have to have the level of design design for a clinic and clinical use.
So it's a simplified version of it but it is offering the one primary feature that the.
The restore offers that no other product has been able to achieve and which seems to make a major difference in the success of regaining and re learning patterns and that's propulsion.
Our lifting the heel forward.
That is the key feature of the reboot program as we call it.
As a significantly.
Significantly different product, but at the same concept as restore.
I see thats very helpful. Thank you.
Your next question is from Slam of course.
With H C Wainwright.
Thank you and this is all came from hits of Android Good morning, Larry and Alright.
And suddenly a very encouraging quarter and a good start for 2020 one.
So what about the backlog.
Hmm.
And you stated.
A detailed cases pending.
And in Germany.
And at the same time, you're also waiting for the Federal Court.
On the issue its decision.
How many of these 82 cases are actually entangled with the index and death.
Fish and and this and that you'll have you'll have had previously.
Three of four.
Insurance groups that head on.
And that hadn't had contacts with the two folks right.
Victoria do you want to pick up that one.
So I'll take the question is how many of the 82 is subject to the to the social cost base on.
Or it gives the within the social court case.
Yes.
Okay and that we've put it up and delivered to and the neighborhood of the 30 K.
Cases, but I want to verify that so give me one minute and.
And just opening it up.
Okay.
Yes.
Yes, it's 30 cases 30.
Third the case of the 82 are currently in.
And social colt and the.
And will be.
There will be affected by it.
Yeah.
Okay, Okay and.
And then and <unk>.
The question for the statistics ones and the U S too because you potentially have.
Some of these folks both of the VA system, which does not get impacted by the and by the CMS.
All of the Hep C. P T S cord.
So I was just trying to figure out where you are with not only with the.
And with the VA study.
And also you know.
I would think potentially the folks who are going from the VA system have a better chance to get through and.
And acquired the product is this is that is my thinking correct or.
And also not so part of it.
No.
I think you're thinking of is correct and it's similar to ours. The Va's National policy has.
Provided the system's routinely to patients who qualify.
So all of those 56 of the majority RBA.
Or he might have the specific number and I.
Grab it quickly and in a minute.
But the.
The key element is the V ASB and open there of running about depending on region of the country.
About 25% to 50% of open so we were sitting of zero most of last year.
And with this group so we've made really good progress, particularly in the south eastern and.
And central part of the United States, where the.
Little behind and the what we see and the western and northeastern part of the United States relative to the VA has been as active.
So the pipeline should open up and those patients do have a coverage policy. So if we can get them trained and they have the successful training, we can provide and systems.
Perfect.
Secondly, I'm encouraged by.
The net store getting re launch.
So should we think of.
The RM conference being the place where you would potentially put all of the energy incentive getting debt as the launch.
Got it and also.
And the past one year.
And what have you kind of learned.
You know.
As you are getting prepared for this and relaunch of.
After the store product.
First our efforts and plans on Relaunching, our prior to the symposium of the ACR M conferences in September.
And we think that's a very medium from one because the the data continues to be very positive and to have those discussions and presentations of further data I think are valuable for other sites, but we.
Our main focus on our launch and the short term has been with national accounts.
As we have evaluations now going on in some fairly large chains.
That if those.
<unk> go as we would expect we can see expansion and those change so the launches really already underway by virtue of the evaluations that have been started and at least four major groups of three and the U S. One and you can.
Hey.
So the ASRM is supportive of for US and also we hope to see more published papers.
From the original study sites.
And there's been restarted at installing abilities and of the U.
Alright. Thanks. Thank you. Thank you gentlemen, and talk to you so on and good luck. Okay. Thank you okay.
And your final question is from the line of Martin Polak with Cantor Holdings.
Yes, gentlemen, and I don't know if you can hear me.
Yes, and yes, yes, we can hear you okay.
Yes.
Just want to ask a few questions here and there are somewhat different but the related to a couple of things have been happening in the quarter, but among the most important seems additions to your board.
Took place in November.
And you hired what would seem to be a specialist and the whole CNS area Randall listener.
Can you talk about her and blood.
And that should bring to the board considering that.
This is the targeted addition.
And towards where the peers will be the most important part of the growth of of your business the emerging U S market.
And obviously getting the coding right.
Tell us a little bit about her because I think it seems that this addition is different and what you've had on the board and in the past is.
And as the first question and second one.
It seems based on the baseline of your comments already on the fourth quarter quite a positive surprise.
Can you give us the head what second half base shape up in terms of the upside.
Yeah, and he is and what you would say is the baseline of the expectations.
And again I'll go straight to the third question the share of activity and this and the stock has been very unusual it seems that.
The stock has just basically been.
Seeing the massive oversupply of shares.
There was obviously this offering that came through.
And what do.
Do you think we're almost done with that oversupply and names, it's really a matter of not the man.
On the demand side, you know stock looks incredibly cheap.
And yet.
The consistent selling.
And what have you heard from H C Wainwright and what do you know about that.
Well.
Let me answer the first two and I'll ask oriented to adjust the third one.
Regarding our board and our ability to successfully recruit ramble richness to join us.
And was really a strong belief by everybody on the management team as well as the board that the biggest limiter to these innovative technologies has been reimbursement and.
And.
Randall rich nor has extensive experience she had headed up all health care policy Boston scientific for many years successfully building that program from the ground up she had subsequently.
The started her own company.
Expertise in reimbursement successfully sold the company after the groom and then she has been highly involved in the.
The University of Michigan School of public health. So her background and knowledge base is high but also particularly important is her personal knowledge and up to date interaction with CMS.
She has been a quite active with the medical device manufacturers Association.
And has helped guide many companies through this pathway. So her joining our board.
It was a recruiting effort on our part frankly, I think theres. The she benefit many companies were fortunate she joined us.
But she has helped us.
Solidify our policy and in the pathways were pursuing as had been advising us and leading us to the right people to ask questions. So it was a very specific intentional targeted the filling of a GAAP and.
We're very happy to have her on the board.
To your second question.
And second half, we haven't given a specific forecast at this point.
<unk> made the world of little bit too uncertain for that but we've talked extensively this morning about expecting year over year growth.
As the year progresses, because there are many patients are whether the ones and the German courts or the V. Eight that we had been that are fully qualified that we'd like to move through the system. The.
The cycle time to move those individuals' through is about six months on average from every successful setup of training conducted and the training and getting the unit.
So the growth from those patients will really depend on how open the markets are here in Q2 and in Q3 that will sort of define our calendar year of level of success, but we should have a good second half of the year is our expected expectation.
But COVID-19 has had multiple waves. So we have to be a little cautious on that.
Cory do you want to pick up on the share activity.
Yeah I can you know we don't have the.
Insight into the different activities and this has been going on is we don't obviously control it and the only thing I would state is that the public domain. Maybe you can also take a look and Owen.
On March 11, and we filed and Thats one that was related to the February fund raising.
Took the and effective took effective by the SEC on market share.
19 debt.
It might have.
And pushed some shareholders that have participated.
To send some of their shares.
Open market.
But we don't control of the til I don't I don't have anything to add besides of that.
I see.
Thank you very much.
Thanks, any other questions for today.
And there are no further questions and ill now turn the call back over to Larry.
Okay. Thank you very much for everyone who joined today.
We appreciate your time and your interest please stay tuned to our upcoming the information and publications and have a good day. Thank you very much.
Ladies and gentlemen, this concludes today's conference call. Thank you for participating you may now disconnect.
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And then.
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Net.
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