Filing summary
Entity and period: The supplied filing is ReWalk Robotics Ltd.’s Form 10-K for the fiscal year ended December 31, 2017, filed March 8, 2018. It is not a filing under the name Lifeward Ltd.; confirm the issuer and filing before relying on this summary. Financial amounts below are U.S. dollars.
Business context and financial performance
ReWalk develops and sells robotic exoskeletons for people with mobility impairments. Its marketed products were ReWalk Personal, for home and community use, and ReWalk Rehabilitation, for clinical settings. The company was also developing Restore, a soft-suit exoskeleton initially intended for stroke rehabilitation.
| Metric | 2017 | 2016 |
|---|---|---|
| Revenue | $7.753 million | $5.869 million |
| Gross profit / margin | $3.101 million / 40% | $0.736 million / 13% |
| Operating expenses | $25.093 million | $31.177 million |
| Operating loss | $21.992 million | $30.441 million |
| Net loss | $24.717 million | $32.503 million |
| Net cash used in operations | $22.498 million | $27.537 million |
| Cash and cash equivalents at year-end | $14.567 million | $23.678 million |
Revenue rose 32%, primarily from ReWalk Personal sales; Personal revenue increased 44% to $7.463 million, while Rehabilitation revenue fell 57% to $0.290 million. The company placed 107 units in 2017 (103 Personal and 4 Rehabilitation), versus 119 in 2016. Improved gross margin reflected sales mix, rental-to-purchase conversions, lower product costs and cost reductions. Operating expenses fell 20%, and the workforce declined from 94 to 65 employees.
Revenue was concentrated in the United States ($4.598 million) and Europe ($3.094 million); Asia-Pacific contributed $0.061 million. The VA represented 35.2% of total revenue, up from 33.3% in 2016.
Liquidity, debt and capital
At December 31, 2017, current assets were $20.938 million and current liabilities were $9.727 million. Total liabilities were $19.156 million, including $15.352 million of long-term loan principal on the balance sheet ($6.441 million current and $8.911 million noncurrent). The Kreos loan carried 10.75% annual interest and was secured by substantially all company assets, including intellectual property. Contractual obligations totaled $27.209 million, including $18.456 million of scheduled long-term debt payments.
Cash declined by $9.111 million during 2017. Operating cash outflow of $22.498 million was partly offset by $13.408 million of financing cash flow, including $9.3 million net proceeds from the ATM program and $7.2 million net proceeds from a share offering, less debt repayments and related costs.
Management and the auditor reported substantial doubt about the company’s ability to continue as a going concern. The company had an accumulated deficit of $131.220 million and expected further losses; it depended on cash on hand, cost reductions and additional financing to meet obligations. Shareholders’ equity was $3.707 million at year-end, after $8.260 million in 2016.
Material changes, outlook and significant risks
- Outlook: Management planned to continue reducing spending while prioritizing reimbursement efforts, ReWalk commercialization, clinical studies and Restore development. No specific consolidated revenue or earnings guidance was provided. The company targeted Restore clinical enrollment in early 2018, regulatory applications by the third quarter of 2018, and potential U.S. and European commercialization in the first half of 2019, subject to clinical and regulatory outcomes.
- Reimbursement: Broad U.S. commercial coverage was not established; many insurance cases remained pending. The VA had a national policy for qualifying veterans, and German insurers had announced coverage pathways, but procurement remained subject to individual eligibility and review. As of year-end, 224 insurance claims were pending worldwide.
- Timwell transaction after year-end: On March 6, 2018, ReWalk agreed to sell Timwell up to 16 million shares for $20 million in three conditional tranches. The proceeds were not assured at the filing date. The agreement also contemplated a China joint venture, with Timwell affiliates holding 80% and ReWalk 20%, and included potential substantial dilution and governance influence for Timwell.
- FDA postmarket study and safety: Enrollment in the required ReWalk Personal surveillance study was substantially below protocol targets: nine subjects had enrolled by February 20, 2018. The FDA characterized progress as inadequate; further regulatory action could restrict labeling or U.S. marketing. The filing also disclosed nine reported falls or fractures since 2013, four reported in 2017, and a voluntary correction concerning use instructions.
- Other material exposures: Three IPO-related securities class-action matters remained pending, with no loss reserve recorded because the company could not estimate a loss. The company also faced single-manufacturer and supplier concentration, foreign-exchange exposure, product-liability and regulatory risks, and Nasdaq continued-listing requirements. Management reported compliance with the stockholders’ equity test at December 31, 2017, but future compliance was not assured.
Key facts investors should verify
- Confirm that ReWalk Robotics Ltd., rather than Lifeward Ltd., is the intended issuer and that the 2017 annual reporting period is the intended period.
- Review the audited financial statements and cash-flow outlook, especially the going-concern disclosure, cash balance, debt maturity schedule and funding assumptions.
- Check whether each Timwell tranche closed, whether the China joint venture and related agreements were completed, and the resulting dilution and control implications.
- Verify subsequent FDA communications, study enrollment and any labeling, product-safety or marketing changes.
- Track reimbursement decisions, pending claims and the extent to which announced coverage policies translated into paid placements and revenue.
- Check the status and potential financial effect of the IPO litigation and Nasdaq listing compliance.