Q1 2025 Lifeward Ltd Earnings Call
[music].
Good day and welcome to the Q1, 'twenty 25 Life Ford, Inc Earnings Conference call.
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Speaker Change: I would now like to turn the conference over to Mike Wallace Chief Financial Officer. Please go ahead.
Mike Wallace: Thank you Sidney good morning, and welcome to life with the first quarter of 2025 earnings call I'm, Mike Wallace liquids, Chief Financial Officer, and with me on today's call is Larry <unk>, Our Chief Executive Officer and Allen.
Mike Wallace: Mogador, our vice President of Finance early this morning, Lakewood issued a press release detailing financial results for the three months ended March 31, 2025, which along with this call will discuss certain non-GAAP information.
Mike Wallace: I would ask you to review the text of our forward looking statements in this morning's press release, we anticipate making projections during this call and actual results could differ materially due to several factors, including those outlined in our latest filings with the SEC.
Mike Wallace: A replay will be available shortly after the completion of the call accessible from the dial in information in today's press release.
Mike Wallace: The archived webcast will be available in the Investor Relations section of our website.
Mike Wallace: The benefit of those who may be listening to the replay or the archived webcast. This call was held and recorded on May 15th 2025. Since that date life would may have made subsequent announcements related to the topics discussed. So please reference the most recent press releases and SEC filings the most up to date information.
Mike Wallace: I'll turn the call over to Larry.
Larry: Thanks, Mike.
Larry: Welcome to everyone. Thank you for being with us today.
Larry: As we've discussed before.
Larry: <unk> is laser focused on the binding long term access to our life changing technologies, and making meaningful progress on our path towards profitability.
Larry: We continue to make strides on these objectives in the first quarter. So let me break this down into three focused areas profitable revenue growth tight expense control and cash management and a smooth leadership transition.
Larry: First profitable revenue growth.
Larry: Q1 revenues were $5 million, but we are a seasonal business and we set expectations in Q1 that it will be the slowest of the year Q.
Larry: Q1 revenues were down 300000 year on year.
Larry: But 2024 and included a block of catch up revenues for 2023.
Larry: In reality, the LIFO business was up year on year.
Speaker Change: Mike will go into more detail on this in his section.
Speaker Change: We have made important progress that propel growth in the subsequent quarters in the United States, including the FDA clearance of the <unk> seven our next generation exoskeleton.
Speaker Change: The first approval of a claim for reward seven by our commercial health insurance company.
Speaker Change: A partnership with core life to drive profitable progress in the Workers' compensation segment for rework and expansion of our miles cycle distribution rights, which are highly synergistic for our field sales team.
Speaker Change: Internationally, the reward contract with <unk> in Germany is important both in and of itself as well as a model for working with other insurers in Germany, and we've expanded partnerships with our ultra to distributors, including four new business partners.
Speaker Change: We're excited about the metrics for the coming quarters.
Speaker Change: Key measurements are we have over 120 qualified leads in our U S pipeline up over 70% from just two quarters ago.
Speaker Change: We also had a record number of 36, we walk rentals underway, primarily in Germany, and these rentals are the leading indicator of future sales.
Speaker Change: Ultra G is growing with the new Neil Lane and has grown by 19% and 17% in the last two quarters.
Speaker Change: These measurements give us confidence in the growth, we will see in our business going forward.
Speaker Change: Second category tight expense control and cash management.
Speaker Change: We have taken multiple actions to reduce expenses through efficiency with the highest consideration on the return on investment of the use of cash.
Speaker Change: Key elements include head count facilities cost of goods consolidation of functions into a single operating entity and operating initiatives.
Speaker Change: This equates to a Q1, 25% reduction in operating loss and we expect that reductions will accelerate and savings phased in and revenue grows during Q2, three and four.
Speaker Change: Yeah.
Speaker Change: For cash management and a key factor is obtaining improved predictability from the Medicare administrative contractors or the Max.
Speaker Change: And we have seen more leads move into our system. We have worked collaboratively with them collaboratively with the Max for definition that will move our submissions more predictably and quickly to all the macs in parallel.
Speaker Change: Based on our recent interaction it is our understanding that the Max have agreed on a uniform set of claims data and approval criteria, which we believe will enable faster and more consistent claims decisions, which will result in more timely payment.
Speaker Change: We expect to resolve a significant amount of our past claims and.
Speaker Change: A shorter cycle timeline for approval and payment of future claims.
Speaker Change: And then third smooth.
Speaker Change: Smooth leadership transition.
Speaker Change: On my last conference call I announced that I will be retiring from LIFO mid year it will be.
Speaker Change: Be assisting in the transition to the new CEO.
Speaker Change: The company has built the foundation and has the team required and it's in a position to execute.
Speaker Change: The heart and soul for a sustainable business is in place.
Speaker Change: Although we will not be discussing additional details on this during the call. Today. This remains my and the company's intent and we are together are excited about what the future will break.
Mike Wallace: That introduction I'd like to turn it back over to Mike.
Mike Wallace: Thank you Larry.
Mike Wallace: I'm going to discuss the results on both a GAAP and non-GAAP basis, which excludes the items listed in the reconciliation tables provided in today's earnings release, we believe the non-GAAP results provide a means for investors to better track the underlying performance of the business.
Mike Wallace: Courage you to reference the GAAP results in the reconciliation tables as I discuss the first quarter results.
Mike Wallace: Like when we reported revenue of 5.0 million in the first quarter of 2025 compared to $5 3 million in the first quarter 2020 for this comparison obscures the underlying operational quagga slot license, making as you may recall a year ago at the end of the first quarter 2020 for CMS announced the final Medicare pricing for personal exoskeleton is this.
Mike Wallace: [noise] announcement triggered our ability to recognize revenue for all prior Medicare sales that had been made whether they took place in 2023, where the first quarter of 2024.
Mike Wallace: A portion of revenue recognized in the first quarter of 'twenty 'twenty four derived from Medicare sales in 2023 was about $500000.
Mike Wallace: On an apples to apples basis to compare results in the first quarter of 2025.
Mike Wallace: Versus the activity that actually took place in the first quarter 2024, resulting in a comparison of $5 billion of revenue in the first quarter of 2025 versus $4 8 million in the first quarter of 2024.
Mike Wallace: I would like to get into a little more detail about the breakdown of revenue.
Mike Wallace: In the most recent quarter revenue from sales of former Reebok robotics products and services, including rework Exoskeletons Monocycle and restore exo suits was $1 6 million.
Mike Wallace: While revenue from <unk> products and services was $3 4 million.
Mike Wallace: We experienced significant improvement in <unk> sales to Medicare beneficiaries with over 10 units placed a higher quarterly total than any in the past year.
Mike Wallace: Line of qualified leads that we have built over the past 12 months.
Totals over 120 cases and is maturing with a greater proportion of cases, reaching the later stages of the claims preparation process that can be converted into placements and sales in the future.
Mike Wallace: We delivered a strong first quarter for the <unk> product line with growth of 19% versus the first quarter of 2024, driven by continued robust performance from sales to international customers.
Mike Wallace: In fact, we had market demand just sell more units, but we were we experienced temporary supply constraints due to our transition to a contract manufacturer.
Mike Wallace: Ultra G sales are seasonally the lowest in the first quarter, but in spite of this we continue to see signs that the U S market is firming based on the healthy levels high probability leads in our pipeline.
Mike Wallace: Next I will discuss pipeline metrics for the Reebok product line, where we see very positive leading indicators for future growth.
Mike Wallace: Our number we walk cases and processing United States Rose to more than 125 qualified candidates for future claims submissions up over 70% of the past two quarters, while Germany had 47 cases in process at the end of Q1 up three from the end of 2024.
Mike Wallace: Active rentals also represented an important pipeline metrics, where we walk systems. The current pipeline of active rentals increased by nine in the past quarter to 36 cases, which is broken down to 34 in Germany and two in the U S. N V HMA hospitals.
Mike Wallace: We walk rentals with some attrition typically convert to sales within a three to six month period.
Mike Wallace: For Ultra G systems, we ended the first quarter with orders for 27 systems in backlog and an active pipeline of high probability leads.
Mike Wallace: Moving to gross margin in the first quarter of 2025, our GAAP gross margin was 42, 2% compared to 42 26, 4% in the first quarter of 2024.
Mike Wallace: On a non-GAAP basis, adjusted gross margin was 42, 2% of revenue compared to 33, 7% of revenue.
For the prior year's quarter.
Mike Wallace: The margins in the first quarter, 'twenty, 'twenty, five or below our expectations, primarily due to volume and mix of Reebok products sold in the quarter, which affected our ability to leverage our fixed overhead costs combined with lower margins for ultra G products due to some transitional costs for the move of production to a contract manufacturer.
Mike Wallace: GAAP operating expenses were 7.0 million for the first quarter of 2024 compared to $7 9 million in the first quarter of 2020.
Mike Wallace: Sorry, the first quarter to 125 compared to $7 9 million in the first quarter of 2024 on a non-GAAP basis, adjusted operating expenses were $6 7 million compared to $7 3 million for the same.
Mike Wallace: This improvement is primarily attributable to the realization of cost savings from the closure of two sites in the integration of Walter G as well as lower development costs from the completion of the <unk> seven and the ultra G Neo development programs.
Mike Wallace: Our GAAP operating loss for the first quarter was $4 9 million compared to $6 5 billion in the prior year's quarter on a non-GAAP basis, adjusted operating loss was $4 6 million versus $5 5 million for the same periods.
Larry: We ended the quarter with $5 7 million in cash and equivalents and no debt subsequent to the end of the first quarter. We raised proceeds of an additional $500000 through our ATM facility, which added to our cash balance with that I'd like to turn the call back over to Larry for future remarks.
Mike Wallace: Thank you Mike.
Larry: Based on the results of Q1.
Larry: I reaffirm our guidance of sales between $28 million to $30 million for 2025.
Larry: And our anticipation that the combined effect for the full year of growing revenue and declining operating expenses will result in a Q4 adjusted operating loss of approximately $1 million.
Larry: Before we open this up to your questions I would like to reflect again on what we have accomplished that library.
Larry: In this life changing journey, we have provided approximately 1000 reward systems spread over five generations of the product we successfully gained regulatory clearances from the FDA in the EU.
Larry: To establish and grow this industry, we lead the path for the development of government policy insurance coverage that are essential to enable access for the people who desire to walk again.
Larry: We have built the business with the rework the altra, Jay Neil and the mile mile and miles cycle that collectively are nearing $30 million in revenue on a medical as a medical technology agent of change it is giving people improved health and better lives.
Larry: The first quarter with his progress on <unk> sales and ultra <unk> sales.
Larry: Improvement in operating performance and the demonstration of key capabilities that we will require in order to succeed in the future. So that we're on the right path.
Larry: And we will achieve steady progress towards our goals and this is only the beginning.
Larry: So thank you for your time today I would now like to open the call up to any questions.
Brian: Brian will now.
Larry: Yes.
Larry: We will now begin the question and answer session.
Larry: To ask a question you May press Star then one on your telephone keypad.
Larry: If you are using a speakerphone please pick up your handset before pressing the keys.
Larry: If at any time. Your question has been addressed and you would like to withdraw your question. Please press Star then two.
Larry: At this time, we will pause momentarily to assemble our roster.
Yale Jen: Our first question comes from Yale Jen of Laidlaw and company go ahead. Please.
Yale Jen: Good morning, and thanks for taking the questions we have two here.
Yale Jen: The first question is that.
Speaker Change: Kevin do you have an international business.
Speaker Change: Revenue from all over the world.
Speaker Change: What are you whats your initial assessment in terms of the recent tariff situations.
Speaker Change: Hello.
Speaker Change: Any comments on that.
Speaker Change: A follow up question.
Speaker Change: Okay.
Speaker Change: We certainly are well spread out for both terms of supply and our revenue are across the world. So this is something that we've monitored very carefully what.
Speaker Change: What we have done internally is planned on the supply side for alternatives within market.
Speaker Change: And so that is a pathway that we have as the reward is primarily produced in Israel.
Speaker Change: It is not being affected into the same level and we've been reasonably stable there.
Speaker Change: And then of course, the key question for US is impact on revenue.
Speaker Change: Which we have not yet seen and our primary business for the rework is United States and Germany.
Speaker Change: A little more control, we don't have much in Asia.
Speaker Change: And the Ultra V is again, primarily a international.
Speaker Change: International business with the strongest space in Europe, So we're monitoring it closely and preparing for it.
Speaker Change: Okay, Great. That's very helpful. Maybe just one more question here, which is that.
Speaker Change: You reiterate the <unk>.
Speaker Change: For the year top line guidance for the year and the first quarter revenues to be slightly lower.
Speaker Change: Some of that expected so.
Speaker Change: What will be the confidence then to support the hypothesis that.
Speaker Change: The full year revenue will be within there.
Speaker Change: The range that you saw.
Speaker Change: As stated already.
Speaker Change: But we expect the first quarter is seasonally always a little low for us.
Speaker Change: Because we always had a strong Q4s, particularly with the Altra D. But our confidence is very much based on the momentum we see personally ultra G product line growing as I said.
Speaker Change: 17, and 90% in the last two quarters.
Speaker Change: And on the wrong product line.
Speaker Change: Between the depth of leads that we have in the United States. The rentals that we see in Germany.
Speaker Change: And the addition of a significant partnership with core life.
Speaker Change: Our first commercial pay are all factors that see this growing so we see our annual totals unchanged at a very comfortable because we have a pipeline are better than anything we've ever had before.
Speaker Change: Okay, maybe just squeeze one more sorry.
Speaker Change: So you just mentioned.
Speaker Change: Quarter. This you use.
Speaker Change: Yes.
Speaker Change: That loss could be around $1 million, which is certainly a good news compared to.
Speaker Change: We have at this time.
Speaker Change: Can you give us little bit more color.
Speaker Change: No.
Speaker Change: For that expectation.
Speaker Change: Yeah, Yeah sure yeah.
Speaker Change: Yeah, Yeah, Yeah, Yeah sure sure so I think.
Speaker Change: We sort of articulated that.
Speaker Change: That's where we need to get to a certain breakeven revenue run rate in order to be able to get to that level that we want and with the cost actions that we've taken.
Speaker Change: Bob.
Bob: Particularly the one that was most recently in the Q in the at the end of Q4, when we closed the facility in Fremont and in the other small facility that we had from the the ultra G acquisition, we've been able to bring down our breakeven.
Speaker Change: Revenue quite a bit and so.
Speaker Change: The math the way to think about it I think is that approaching roughly $10 million of quarter or $40 million in the year.
Speaker Change: Should enable us to get to breakeven.
Speaker Change: Level and so we anticipate that in by Q4 with the natural growth in the business with the backlog and the lead generation that we're experiencing right now combined with some of the seasonality.
Speaker Change: Which favors the back half of our year year's performance that those factors will contribute to our revenue growth.
Speaker Change: By Q4.
Speaker Change: At the same time, we're gonna be experiencing continued reduction in our operating expenses.
Did not see the full impact of the cost savings in Q1 that we will yield from all of the actions that we've taken just because some of them are kind of phasing in over the course of the first half of this year. So we'll see more benefit in Q2 and beyond as we get through the second half of the year. So it's really a combination of the.
Speaker Change: The increase in the revenue combined with the <unk>.
Speaker Change: <unk> rationalization of our cost structure and a leaner more efficient cost structure that we're going to have which is going to result in our ability to to really narrow that operating loss.
Speaker Change: Okay great.
Speaker Change: Very helpful. I appreciate it.
Speaker Change: Thank you.
Speaker Change: Yes.
Speaker Change: Okay.
Speaker Change: Our next question comes from Sam the cooler.
Speaker Change: Mark.
Speaker Change: Go ahead please.
RK: Thank you. This is RK from H C Wainwright, good morning, Larry and Mike.
Speaker Change: I'm wondering okay field few questions from me.
Speaker Change: So congratulations on getting the next version of re walk out.
Speaker Change: Into the field.
Speaker Change: Hmm.
Speaker Change: So how different is remarks from some six.
Speaker Change: And in terms of price point is that a change and you know how easy is it to get to CMS.
Speaker Change: To pay or to reimburse it little better rate.
Speaker Change: And then what you have.
Speaker Change: What they have signed up for.
Speaker Change: In the last in the last titration.
Speaker Change: Yeah, Okay, I'll I'll take most of this one the product has substantial differences.
Speaker Change: Part of the lengthy FDA process and review.
Speaker Change: There are changes throughout the system.
Speaker Change: Initially I will identify in the software area. This is a product that is easier to use.
Speaker Change: For the user as we've been able to modify from things we have known from the.
Speaker Change: The experience of all the years of selling these reworks and utilize them.
Speaker Change: Mechanically we have added a number of features that also really came from our customers. They wanted to have multiple speeds and an ability to control. This more easily. So we added a crutch control device, where you can walk slow or faster.
Speaker Change: Stopped more easily and more quickly if you need to so we've made it easier and more functional.
Speaker Change: We've also made the product it's a long list so I won't get them, all but we've made it more powerful with a.
Speaker Change: Greater level of Amperage power within the system with larger batteries and also we've gone to an off the shelf battery, which is safer and more predictable and easier to manage so if you're a person who wants to go for longer walks you don't have to charges as often.
Speaker Change: And then the last area I would say also comes back a little bit to the software. We are now working with the smartwatch on the device, which makes it a it gives us immediate communication.
Speaker Change: How much are using it and they're walking patterns, but also to help manage the product and it's also much easier for the user to manage the product with the.
Speaker Change: What we put in the absence of the smartwatch.
Speaker Change: Those are the major ones to the second half of your question about the price point well all the customers are getting a great value because it's essentially still let's say price than it probably should be higher would be by a major but CMS set the price and if it works well.
Speaker Change: And relative to the CMS paying for this it is fully within FDA coverage.
Speaker Change: We've just started submitting them obviously since we just launched the product in April.
Speaker Change: The best and first indication, we got was a commercial payer.
Speaker Change: One of the top 10, that's already stepped up and bought the first one.
Speaker Change: And.
Speaker Change: They have at least one other room process already so we see the.
Speaker Change: The commercial side and get into paid for a build exactly on what we have had over the years.
Speaker Change: Perfect.
Speaker Change: Great.
Speaker Change: In terms of.
Speaker Change: The expanded mile in a partnership.
Speaker Change: I'm just trying to understand.
Speaker Change: How does this help.
Speaker Change: The commercial sales force team.
Speaker Change: It also.
Speaker Change: What sort of synergies could we see from this expansion and and a reservoir.
Speaker Change: Would it be visible to us.
Speaker Change: I think it's going to be part of the reason why you are confident in our forecast is going to be visible to us.
Speaker Change: Latter half of this year really started in the current quarter and beyond.
Speaker Change: If you look at the product line why this expansion is valuable to US first it puts us in a segment that we didn't have access to before we can sell for home use to everybody now.
Speaker Change: And that is the first area of importance. The second thing every single reward lead we've ever gotten in the last 10 years is a patient who would have indications for this product. So we are mining our database.
Speaker Change: Could use a lot of historical context to play some of these products but.
Speaker Change: Typically in a more active basis, any rework or is able to use a minus cycle. The worse isn't always true there's a lot more monocycle users and there are potential reebok users.
Speaker Change: But it fits quite well with our call point with our customer.
Speaker Change: And.
Speaker Change: For the disease state, where trading so we're pretty happy with that.
Speaker Change: Internally, we added resource that had expertise in this field.
Speaker Change: With another company in the space in a very strong history. So we built up the team in Q1, and we've expanded that now throughout our entire organization.
Speaker Change: And we expect that also is what's going to drive its growth.
Speaker Change: The latter part of Q2 all of Q3 Q4.
Speaker Change: Thank you for that and then.
Speaker Change: Hum on the car life.
Speaker Change:
Speaker Change: Relationship for Workers' compensation.
Speaker Change: Hi.
Speaker Change: We have talked a lot about your your revenue streams.
Speaker Change: Workers comp was not on the top of the list. So are you trying to get that.
Speaker Change: And to enter into a better revenue stream.
Speaker Change: The hardest core life really held them back and generally what works.
Speaker Change: What's the what's the market there for workers' comp in the U S.
Speaker Change: Well workers' comp I'd first from a patient point of view tends to be somewhat ideal because they got to us relatively early post injury and many of the cases are as they are processing. The claims so their patients are frequently in a better condition to be able to get to the product.
And historically, we've had good utilization and small numbers because we didn't have great access to this community.
Speaker Change: The partnership with core life is ideal in that this is their expertise they do the entire effort for the company to take care of patients and workmen comp whether it's for spinal cord injury or many other things.
Speaker Change: So they have very broad access with all of the workman's compensation groups and all of the patients. So they can bring leads into this.
Speaker Change: And help us processes and get them through.
Speaker Change: So the our.
Speaker Change: Our ability to get to the number of sponsors that they could get to was very limited.
Speaker Change: And in their case it is a cigna.
Speaker Change: Significant they cover everybody that those workers comp because of the breadth of product lines.
Speaker Change: What's the ideal expansion point for us.
Speaker Change: Relative to market size.
Speaker Change: They are good market in terms of patient profile and payment.
Speaker Change: It's a some percentage of the market, it's about 6% to 7% of the market and that's something that we didn't have the ability to grow into so we're thrilled with it.
Right and then on the on the bomber.
Speaker Change: Starting with a health insurance.
Speaker Change: Correct me if I remember this wrong I thought this was as far as the organization with whom you cycle. A few years ago that is true how does this new agreement.
Speaker Change: Health and delivering better than the previous settlement.
Speaker Change: Oh, well, we have been working with bombers since the court case, where they did begin to pay per patient and coverage.
Speaker Change: But they did it primarily all contract. They just did each patient on a single case agreement type approach.
Speaker Change: This contract is extensive.
Speaker Change: As you frequently see in Germany, but it defines things in ways that I.
Speaker Change: I think will help set standards for all of the jurors, particularly the German matures.
Speaker Change: I'll give you some examples.
Speaker Change: It's it's got a lot of market development efforts that are that are paid for by the insurer and this means basically they have set payment rates with the training programs. They.
Speaker Change: They have set up a sustainability example that they put in the contracts and we believe it's a good thing and what does that mean, if you have a patient who has a unit and something unfortunate happens such as the cancer and they can't use the unit anymore. We have a contracted agreement. Okay. We will bring it back and they will pay us for storage we will refurbish.
Speaker Change: When they have a new user and they will pay us for that so all of these prices are set and it keeps the product being used in any circumstances. It also defines the replenishment of systems as they wear out and reach their cycle of five years. So the real value of this contract, it's just very detail oriented.
Speaker Change: All scenarios for the German patient population.
Speaker Change: And we would very much.
Speaker Change: To see other German insurers do the same thing.
Speaker Change: Okay. One last question I know I'm I'm, taking up a lot of airtime.
On the altar G itself Hum.
Speaker Change: I'm, just trying to get more additional color and commentary from you.
Speaker Change: In terms of you know over the last year and a half or so that you know you all had it and they are really our bag how.
Speaker Change: How has it performed what's your confidence level.
Speaker Change: Regarding the acquisition itself and what potential.
Speaker Change: Yes can you really expand and get better synergies as well with the rest of your business.
Speaker Change: Yeah.
Speaker Change: You know for us the early cycle.
Speaker Change: This didn't grow or do as well as we thought in the marketplace and we kind of reported we had a couple of quarters that we're in a strong early on from a combination of integration and market factors we believe.
Speaker Change: But we are very comfortable at this stage with now that we have completed all aspects of the integration about where this goes forward and I'll break that into categories are first they had a an older product line, but some things in development that they were unable to finish and last summer. So we're.
Speaker Change: About nine months past the ability with the new knee launch and the Neal plus so this is a better product at a better price.
Speaker Change: <unk> has a lower cost of goods it gives us a better margin.
Speaker Change: So that was particularly important and once we have that launched it put us in a better position to move it to a contract manufacturer where I believe we also will get continuing efficiency by working with them.
Speaker Change: And reduce the cost that we had in the facility. So from a financial point of view getting that new product out and getting it to a contract manufacturer.
Speaker Change: Really improved and changed our profile to where ultra G is accretive to our business at this stage.
Speaker Change:
Speaker Change: Uh huh.
Speaker Change: Holiday shift of the teams to operate as a single entity. It took some time, but we now have a singular sales force a singular sales service support group.
Speaker Change: And those flow quite well for us.
Speaker Change: Across the different product lines.
Speaker Change: I think the evidence that we are we particularly like is the 19% and 17% growth. We saw in the last two quarters that it has stabilized.
Speaker Change: And the one area that we've done better than we expected has been international.
Speaker Change: As though that is roughly half of our business a little more.
Speaker Change: For what we're trying to do so.
Speaker Change: It took a little while to get the integration of the pieces working but the last two quarters.
Speaker Change: Adding up exactly as we hoped it would.
Larry: Perfect. Thank you very much for your patience with me this morning, Larry appreciate it.
Speaker Change: Thanks, guys.
Speaker Change: The next question comes from Ben Hayner of Lake Street Capital Markets go ahead. Please.
Ben Hayner: Good morning, gentlemen, and thanks for taking my questions first off for me on the recent ER kind of predictability I guess or.
Ben Hayner: With the Dnb, Max kind of trying to define a uniform.
Ben Hayner: So the criteria for the for these claims.
Ben Hayner: Is that something that is a formal process does that does that ever gets kind of published somewhere else or you know folks might be able to.
Ben Hayner: Figure out how many patients to this might be applicable to how does this all kind of come together I guess.
Ben Hayner: Well I.
Ben Hayner: I think someday might give publishers the Harvard case study, but.
Ben Hayner: I'll save that for a different time.
Ben Hayner: I think.
Ben Hayner: This is not a formal process, but it.
Ben Hayner: It was.
Ben Hayner: Really important what we've seen happen in this past quarter. So we knew it would take some time to shake out and develop the processing that we're putting in the claims exactly what they wanted and we can figure out when they were rejected them why they rejected them. So we could we could deal with it and part of it is the complexity of a radically new.
Ben Hayner: Product being put in a category that doesn't have the cleanest definition. So we are defined in the brake category as an orthotic for example embraces.
Ben Hayner: <unk> is generally can use and operate those at home in 'twenty corporate eight hours.
Ben Hayner: So we want to be we had to educate and learn and learn both ourselves and with CMS. The types of work we had to do too.
Ben Hayner: Properly process, it and get it moving through.
Ben Hayner: So importantly, what we've seen in the past few months is time.
Ben Hayner: Speaking with the.
Ben Hayner: Max they they really have started to standardize and give us a reason and what they wanted to see in definitions.
Ben Hayner: That made this flow through as a brace and robotic device.
Ben Hayner: And so we anticipate based on what they've guidance they have given us working together with us collaboratively that we will be able to submit these things in a predictable cycle going forward because it has not been predictable.
Ben Hayner: Across all of the Max so far.
Ben Hayner: But we've got a pretty good quarter of.
Ben Hayner: Of our interaction with them. So they they certainly had been trying to work with us.
Ben Hayner: I would just say there are government seed.
Ben Hayner: Got it so.
Ben Hayner: <unk> kind of it is these patients through the whole process I think he mentioned and more of them being that later stages of the claims process is it more of a function of knowing what you need to collect for.
Ben Hayner: The submission or is it a kind.
Ben Hayner: Kind of a faster feedback loop from the Tami Max than you've historically experienced whats kind of goes into that that speed up I guess.
Ben Hayner: The speed up really got around some of the definitions of the submission of particularly around home use.
Ben Hayner: So we are we submitted around a product over.
Ben Hayner: A longer cycle life expectation and they were looking for when does this really functional at home.
Ben Hayner: Where they wanted to submit so we have determined what they want submitted now relative to home use.
Ben Hayner: So we've established a definition that really wasn't clear before.
Ben Hayner: For them and for us because ultimately the production design for obvious there's no question about it but at what point are they ready to pay for it and.
Ben Hayner: So we believe we've established that through the interaction with them.
Ben Hayner: For Oh, what we will provide for documentation to demonstrate that the patient can do exactly what the regulations paper.
Ben Hayner: Okay got it and then on the kind of commercial insurance fraud, obviously, congrats on getting that first reward seven through with a commercial insurer.
Ben Hayner: But do you expect them to have kind of similar criteria. What are the Oems are looking for is that going to just kind of be one off varied between commercial insurers or how do you see that developing.
Ben Hayner: Are they are not quite bound by some of the categorization things that are part of CNS again, we were in a brace category and to the commercial insurers are a little more patient focused and if it works and what works for their patient. So no. We have not our submission requirements in terms of a prescription in clinic.
Ben Hayner: Data is unchanged, but dealing with the categorization.
Ben Hayner: <unk> of it is embraces is not as relevant to the commercial insurers.
Ben Hayner: They're just focused on one helps for their patients. So the processing. These initial ones are single case agreements.
Ben Hayner: With a focus on clinical value and clinical outcomes.
Ben Hayner: So we like the process a little better.
Ben Hayner: And importantly, as we're developing these centers of excellence they get all patients they get the Medicare patients, but theyre also they got some workmen comp patients are going to get these commercial payers. So we will work to submit to all of those groups as we grow going forward. So our base, yes started with Medicare and we still have RBA.
Ben Hayner: Component, but you hear us talking about our growth with workman's comp and we have every intention to grow it.
Ben Hayner: Work with commercial payers as well so it is building.
Ben Hayner: Entire structure to help this patient population.
Mike Wallace: Okay got it that's helpful. And then lastly for I guess, Mike.
Mike Wallace: It was up a bit year over year and I apologize if I missed this was there any sort of onetime items that we should be backing out or considering.
Mike Wallace: Well, we did have so in the quarter, we did have approximately.
Mike Wallace: Just.
Mike Wallace: Approximately $300000 of bad debt expense that we took and part of that was because of the this clarification now with the criteria of the Medicare claims being processed.
Mike Wallace: We identified some very early.
Mike Wallace: <unk> dating back quite a bit that.
Mike Wallace: Where we did not believe we wouldn't be able to satisfy the criteria that was necessary because at the time you know again, we do.
Mike Wallace: No so.
Mike Wallace: So as a result of that we did we did.
Mike Wallace: We did reserve for some of those receivables.
Mike Wallace: And.
Speaker Change: Yeah, we thought it would be probably trying to do it now that we had clarity of what's criteria. It was but on a going forward basis now we intend to obviously to pursue and get the payment.
Mike Wallace: Payment for.
Mike Wallace: The remainder of the AAR and the claims associated with those.
Mike Wallace: Okay got it that's all I had gentlemen, thanks for taking the questions.
Speaker Change: Thank you Ben.
Mike Wallace: Yeah.
Mike Wallace: Okay.
Mike Wallace: Question. Please press Star then one.
Mike Wallace: So operator, we believe we're set.
Speaker Change: I'd like to close the meeting for a moment if I could.
Speaker Change: Absolutely yes.
Speaker Change: So before we formally close I'd like to make some final comments about the dream of Doctor makeover.
Speaker Change: And that was a prolific engineer that became paralyzed and he thought to change the world with an exoskeleton.
Speaker Change: And our team was able to build on his creation and establish an industry and we changed a lot of lives and the path from an idea to an industry. It took a wonderful diligent people.
Speaker Change: Within this company and with the clinics and researchers who worked with and I've been very honored to be able to work with them and I just want to express. Thank you on behalf of Dr. Go over myself and others that have worked in that community.
Speaker Change: With that operator, thank you for your help today.
Speaker Change: Thank you.
Speaker Change: France has now concluded.
Speaker Change: Thank you for attending today's presentation you may now disconnect.