Q3 2022 Rewalk Robotics Ltd Earnings Call

Good day and welcome to the Q3 2022 Me Walk Robotics Ltd earnings Conference call. All participants will be in a listen only mode should you need assistance. Please to turn the conference specialist by pressing the star key followed by Seattle.

After todays presentation, there will be an opportunity to ask questions.

I ask a question you May press Star then one on a touchtone phone to withdraw your question. Please press Star then two.

Please note this event is being recorded.

I'd now like to turn the conference over to Mike Lawless CFO of the company. Please go ahead.

Thank you Dr. Nabil good morning, and welcome to re walk Robotics third quarter 2022 earnings call. This is Mike Wallace re walk robotics, Chief Financial Officer, and with me on today's call is Larry just since key Chief Executive Officer.

Earlier. This morning, we walk issued a press release detailing financial results for the three and nine months ended September 32022.

This press release and a webcast of this call can be accessed through the Investor Relations section of the reward website at Ri walk Dot com.

Before it gets before we get started I would like to remind everyone that any statements made on today's conference call that express a 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 Reform Act.

Yeah.

These forward looking statements are based on information available to reward management as of today and involve risks and uncertainties include those including those noted in our press release and reward filings with the SEC.

Such forward looking statements are not guarantees of future performance actual results may differ materially from those projected in the forward looking statements.

We work specifically disclaims any intent or obligation to update these forward looking statements, except as required by law.

A telephone replay of the call will be available shortly after the completion of this call you'll find the dial in information in today's press release, the archived webcast will be available on the company's website in the Investor Relations section.

But the benefit of those who may be listening to the replay or the archived webcast. This call was held and recorded on November seven 2022. Since then re work.

May have made announcements related to the topics discussed so please reference the company's most recent press releases and SEC filings and with that I'll turn the call over to Lee We walk CEO , Larry just an escape.

Thank you Mike Good morning, Thank you for joining us today.

I wanted to start with an update on the strategic activities that are occurring to allow the establishment and support.

Exoskeleton through providing public.

Or private coverage for individuals seeking every work system.

In the U S. We have submitted our first case Medicare administrative contractors known as the Max.

And have more submissions in process.

The rework exoskeleton as always pioneered the exoskeleton industry, starting with our de Novo FDA clearance more recently with our breakthrough designation for the pending stare send in decent features.

We have now completed the first exoskeleton submissions to CMS.

The importance of submitting claims means that paralyzed Medicare beneficiaries may soon experienced the benefits of functional and emulation.

While coverage is in place under the code, we established with CMS, the unfinished designation of the benefit category and the pricing for exoskeleton.

Is now a part of the Mac submission process to complete the ongoing supply of exoskeleton systems.

The CMS is using a new process.

The skeletons are unique the timelines are not specifically defined however, we expect to receive some guidance or response approximately 30 days after the submission.

In Germany rework has led the way.

Stablish and coverage code.

And then entering into contracts with several large public and private insurers.

Well it has been an active process with several of the larger insurance entity.

The question of whether exoskeleton provides direct.

Indirect disability compensation for the spinal cord injured individuals seeking to walk again has been pending in the courts since may 2017.

This cases has answered the highest end Supreme Court in Germany for these matters the federal Germans Social court.

This session is scheduled later this week.

November the pet and a decision is expected just after the hearing.

Predictable coverage for individuals who meet the inclusion exclusion requirements is essential for the clinical and spinal cord injury community to be able to consider their possible options to have a better quality of life.

This will also permit the industry to properly advise and help his community.

Yes.

In parallel with the coverage ongoing innovation and improvements on the re work personal exoskeleton systems are moving forward.

The company has received and is acting with the FDA with additional information request through the regulatory review process.

These additional capabilities will significantly improve users access to more locations and environments and increase their opportunities to achieve the benefits of function and emulation.

For our continuing technology innovation efforts, we are advancing the reboot soft exo suit program for post stroke home and community use.

This design allows both plantar endorses selection for the users of the clinic home and community.

While the design is a breakthrough designation with the FDA.

We are also presently reviewing the existing coverage codes that may support payments and have identified multiple potential coverage pathways.

In parallel we are working with an independent firm to help define the market requirements and seek feedback on the initial product concepts from all stakeholders, including users clinicians and payers.

I'd now like to turn the call back to Mike, who will review of financial detail.

Thanks Laurie.

We walk reported revenues for the third quarter 2022 of $886000 as compared to $2 million in the third quarter of 2021.

For the nine months ended September 32022, we have recorded revenues of $3 3 million as compared to revenues.

Revenues of $4 7 million in the same period of the previous year.

For the Q3 2022 results decreased as compared to the same period last year was due to sales of a lower number of rework exoskeleton units. The sales of rework units in the quarter were adversely affected by the timing of coverage decisions by insurers and delays.

And the training timetable for some of our candidates.

Also important to note is that the prior period reflects the benefit of a large multiple unit order from an institution of physical rehabilitation that did not reoccur in Q3 2022.

On the positive side in Q3, 2022, we generated revenue of about $250000 from the sale of miles and miles cycles, which marks our highest quarterly performance for this product line.

As we look at our progress during Q3 within our we walked personal six point, though commercial pipeline. We had a total of eight new insurance decisions to place or we walk device for rental or direct purchase and three new VA decisions to place or we walk device for rental.

Our current pipeline.

Active rentals consists of 26 cases in our overall number of cases in process. Currently sits at 74 with 56 in Germany and 18 in the U S. Not every case in our pipeline will translate into an actual into an eventual sale, but these figures do provide some perspective on the scale of the opportunities on which we are working.

Turning to gross margins in the third quarter of 2022, our gross margin was 25% as compared to 58 in the prior year's quarter. This decrease was mainly driven by the impact of fixed production costs being covered by the margin from fewer sales of the reward personal six pointed out devices as well as rising production costs.

Yeah.

Our third quarter of 2022 operating expenses were four $5 7 million as compared to $3 8 million in the prior year's quarter.

Within R&D. This is this increase is attributable to higher consultant activity on development projects, partially offset by some grant assistance from the Israel Innovation authority.

Sales and marketing we also had an increase in spending primarily due to higher consulting expenses related to the CMS progress sale.

Sales related expenditures for trade show activities since the Covid restrictions are being lifted and personnel related costs.

General and administrative expenses also grew primarily from higher professional services.

<unk> with the expanded 2022 proxy process. The proxy process contributed an incremental spend above typical levels of about $600000 during Q3.

Which will not carry into Q4.

For the year the impact of the extra spending on the extended proxy process took totaled one $1 million.

Our net loss for the third quarter of 2022 was $5 5 million or <unk> <unk> per share as compared to a net loss of $22 7 million or <unk> <unk> per share in the third quarter of 2021.

Our non-GAAP net loss for the third quarter of 2022 was $5 1 million or <unk> <unk> per share as compared to $2 3 million or <unk> <unk> per share in the third quarter of 2021.

We ended the quarter with $74 million in cash and cash equivalents with no debt. We continue to have a strong balance sheet with resources to fund our organic growth and pursue selective attractive business development opportunities, which can supplement our growth.

We also have an active share buyback program in place, which we initiated during Q3 2022.

Since the inception of the program, we have bought back a total of $863000 of stock representing a repurchase of about one 4% of our shares outstanding.

With that I'll turn the call back over to Larry for further comments.

Thank you Mike.

I'd now like to provide more detail for Q3 in the last quarter of 2022.

Here are two key environmental considerations first.

Both the U S and German markets were almost fully open which is now allowing training and placement systems.

As our cycle time for sales it's about nine months, we are now moving past the final surge of Covid that was one element that limited the units closing in Q3 due to delayed starts early in the year.

Our current global home system pipeline 74 systems.

For our clinic based products, we are seeing capital budgets that are constrained and delaying company that purchases the capital budgets pipeline is 31 systems.

Second environmental factor. The company has remained active with several major tradeshows globally year to date and in particular, we're able to develop leads at the Rio care Conference in September our largest show in the world, which had not been health in the prior two years.

Sessions or meaningful that allowed a restart of many contracts.

Here's a follow up on five of the annual objectives, we defined in Q1 and that we review each quarter.

Objective number one revenue.

Due to the delayed timing of reimbursement decisions from our original projections, we no longer expect year over year revenue growth for 2022 due to the slow movement, the pending cases year to date.

The timing of many of these are beyond our control and that limits our ability to provide further clarity at this time.

We do anticipate that many of the deferred cases will conclude in Q4.

Objective number two product offerings.

We continue to pursue at least one additional commercial product line, which we believe can allow further leveraging of our organizational structure.

Provide growth and help achieve the pathway to profitability.

We are focusing on opportunities with some that may be accretive.

Others that offer strategic growth all our adjacent technologies, each help us build infrastructure and each could have meaningful synergy.

Objective number three.

And the German court.

In September <unk>.

S. A firmed that the Max have discretion to cover and reimburse that we walk our system.

CMS also indicated plans to further deliberate unintended to category designation for the rework exoskeleton and stated that we'll provide some more information in the near future.

With the submission to the Max now underway.

We expect some feedback to these within approximately 30 days.

The German court case will be held later this week and we anticipate attendance from several stakeholders in recession.

A direct compensation determination means that the quote functional deficit has to be compensated for as far as possible. According to the current state of medical technical process.

And that the restoration of function to the basic need.

And indirect compensation determination is quote.

The consequences of the disability are eliminated for mitigated in a so called basic need of daily life is affected.

So the court's decision will provide the legal basis for the supply of Exoskeletons to covered beneficiaries in Germany.

Our fourth objective technology development.

Our goal was to FDA device applications for improved reworked designs to launch in 2022 and 2023.

The first of these submissions was made in June 2022, and the second submission is now expected for Q1 2023 due to the addition of usability requirements and submission.

The timing of launches dependent on CE, marking an FDA processes and some supply chain considerations.

And then objective number five.

Operational controlled but increased investment of an additional $3 million to $4 million year over year in reimbursement product development market development, and excess investor relations and new business development.

We have followed through on reimbursement support in a precise manner.

<unk> been able to restart market development and access programs most of it.

And have resource the process for identifying and pursuing new business development.

We're still considering an expansion of our iron support with a mix of internal expansion and contracted support for select functions.

We will provide updates to each via press releases quarterly earnings calls and other appropriate communications.

Because of coverage decisions. This remains a pivotal year for this company and for this industry.

We remain highly focused on execution to the benefit of patients and to enhance our shareholder value.

Thanks for your time and interest today.

To turn the call over to question sounds a stage operator, if you'd please go ahead with the instructions. Thank you.

Thank you we will now begin the question and answer session to ask a question you May Press Star then one on the I touched on the phone if youre using a speakerphone. Please pick up your handset before pressing the keys.

But anytime you have a question has been at this and you would like to withdraw your question. Please press star two.

At the San Diego, Boston Medallion, so that's something that kind of thing.

Okay.

Okay.

Operator, if we have no questions at this time.

I'd like to thank everybody that listened to this today and if you do have questions I'd encourage you to reach to US who are the investor relations part of our company and we look very much forward to providing updates to these initiatives that we've been working on.

Thanks, very much for your time today.

Thank you. The conference has now concluded. Thank you for attending today's presentation you may all now disconnect.