Business context and reporting period
The supplied filing is ReWalk Robotics Ltd.’s unaudited Form 10-Q for the three months ended March 31, 2019—not a Lifeward Ltd. filing. ReWalk develops and commercializes wearable exoskeletons, including ReWalk Personal and ReWalk Rehabilitation, and is developing the ReStore soft-suit system. Financial amounts below are in U.S. dollars; dollar figures are in millions unless stated otherwise.
Key financial metrics
| Metric | Q1 2019 | Q1 2018 / prior date |
|---|---|---|
| Revenue | $1.581 million | $1.579 million |
| Gross profit / margin | $0.926 million / 59% | $0.682 million / 43% |
| Operating expenses | $4.501 million | $6.524 million |
| Operating loss | $(3.575) million | $(5.842) million |
| Net loss | $(4.000) million | $(6.327) million |
| Net cash used in operating activities | $(4.253) million | $(5.026) million |
| Cash and cash equivalents, March 31 | $8.862 million | $9.546 million at Dec. 31, 2018 |
| Total assets / total liabilities, March 31 | $17.036 million / $14.981 million | $14.962 million / $13.017 million at Dec. 31, 2018 |
| Kreos loan principal outstanding | $8.3 million | — |
Net loss per share was $(1.25), compared with $(5.26), on a reverse-split-adjusted basis. Weighted average shares were 3.211 million versus 1.202 million. The company reported a $0.673 million decrease in cash, cash equivalents and restricted cash during the quarter; ending combined cash and restricted cash was $9.674 million.
Material changes versus the prior comparable period
- Revenue was essentially flat, but units placed fell to 14 from 23 (14 Personal units and no Rehabilitation units, versus 22 and one, respectively).
- Gross margin increased to 59% from 43%, which management attributed mainly to a higher average selling price and sales mix.
- Operating expenses declined 31%, to $4.501 million. R&D fell 34% to $1.414 million, sales and marketing fell 32% to $1.587 million, and G&A fell 26% to $1.500 million.
- Net loss narrowed by $2.327 million, while operating cash use improved by $0.773 million.
- Geographic revenue mix shifted: Europe contributed $1.079 million versus $0.341 million; U.S. revenue was $0.497 million versus $1.178 million. The company reported five previously rented European units converted to purchases.
Outlook, risks, contingencies and unusual items
- Going concern and funding: The company cited a $156.9 million accumulated deficit, ongoing losses and $4.3 million of quarterly operating cash use as raising substantial doubt about its ability to continue as a going concern. It expects to fund the next 12 months with available cash, expense reductions and equity or debt financing; additional funding may be needed, and no assurance is given that it can be raised on acceptable terms.
- Product outlook: Management expected ReStore commercialization in the U.S. and Europe in late Q2 or Q3 2019, subject to FDA clearance and CE marking. It planned to focus on ReStore, reimbursement expansion for ReWalk Personal, and the FDA postmarket study. No specific full-year financial guidance was provided.
- Financing and dilution: The February 2019 offering generated $4.37 million gross proceeds. A separate registered direct offering closed April 5, after quarter-end, for approximately $4.25 million gross. Form S-3 offering limits, contractual restrictions on certain future financings, further equity needs and dilution are material considerations.
- China investment: Management no longer believed the remaining $15 million Timwell investment could close on the original terms and cited significant risk of failing to agree on revised terms with Timwell or its affiliate RealCan.
- Regulatory and product risks: The FDA classified a voluntary ReWalk labeling/use-instruction correction as a Class II recall. The mandatory postmarket study had enrolled 12 subjects by March 31, substantially below protocol targets; the FDA characterized progress as inadequate. Failure to address study requirements could lead to further regulatory action, including restrictions on U.S. marketing.
- Legal and contractual exposures: One IPO-related shareholder action remained, with potential loss not reasonably estimable and no reserve recorded. The company also disclosed contingent IIA royalties of approximately $1.5 million, Harvard collaboration/license commitments, and $16.281 million of contractual obligations in its summary schedule.
- Other unusual items: A 1-for-25 reverse share split became effective April 1, 2019; share and per-share figures were adjusted retrospectively. Adoption of the lease accounting standard added $1.994 million of right-of-use assets and $2.143 million of lease liabilities at quarter-end.
Important facts for investors to verify
- Confirm the issuer identity: the provided filing is for ReWalk Robotics Ltd., while the request names Lifeward Ltd.
- Assess cash runway, financing capacity and the going-concern warning, including the applicable Form S-3 limits and post-quarter April offering proceeds.
- Track quarterly unit placements, revenue mix and whether the improved gross margin is sustainable.
- Verify progress toward FDA clearance and CE marking for ReStore, and enrollment and regulatory status of the ReWalk postmarket study.
- Monitor Nasdaq continued-listing compliance, share-price and liquidity risks, potential dilution, and the status of the Timwell/RealCan discussions.