Business context and reporting period
ReWalk Robotics Ltd. (the filing’s registrant name; not Lifeward Ltd.) filed this Form 10-K for the fiscal year ended December 31, 2016. It designs and sells ReWalk Personal and ReWalk Rehabilitation exoskeletons, primarily for people with paraplegia. This is an annual report; it does not provide a standalone fourth-quarter income statement.
Financial performance and liquidity
| Metric | 2016 | 2015 |
|---|---|---|
| Revenue | $5.869 million | $3.746 million |
| Gross profit / margin | $0.736 million / 13% | $0.214 million / 6% |
| Operating loss | $(30.441) million | $(25.174) million |
| Net loss | $(32.503) million | $(25.415) million |
| Net loss per share | $(2.47) | $(2.10) |
| Cash used in operating activities | $(27.537) million | $(25.180) million |
| Cash and cash equivalents at year-end | $23.678 million | $17.869 million |
Revenue grew 57%, with 119 units placed versus 73 in 2015: 109 Personal units and 10 Rehabilitation units, compared with 53 and 20, respectively. Personal device revenue rose 88% to $5.197 million; Rehabilitation revenue declined 31% to $0.672 million. Gross margin improved, but operating expenses rose 23% to $31.177 million, leaving substantial operating losses.
At year-end, total assets were $31.763 million, total liabilities $23.503 million, and shareholders’ equity $8.260 million. The company had drawn the full $20 million Kreos facility at 10.75% interest; the debt was secured by a first-priority lien on substantially all assets, including intellectual property. Current maturities were $7.495 million and long-term debt was $10.518 million, net of current maturities. Operating cash burn exceeded year-end cash, and the company reported an accumulated deficit of $106.492 million. Financing activities provided $33.783 million in 2016, including debt proceeds and equity offerings.
Material changes versus the prior year
- Revenue increased by $2.123 million, driven by Personal device sales and reimbursement activity; 51 positive reimbursement coverage decisions were reported for 2016 versus 23 in 2015.
- Net loss widened by $7.088 million. Research and development expense rose 52% to $9.028 million, partly due to the Harvard collaboration and FDA-mandated post-market study. Financial expense increased to $2.059 million, mainly reflecting Kreos-related costs.
- Cash increased by $5.809 million despite operating cash outflow, supported by the $20 million loan, $11.1 million net proceeds from the November follow-on offering, and $4.1 million net proceeds from the ATM program.
- One customer accounted for 33.3% of 2016 revenue, up from 14.8% in 2015.
Outlook, risks, contingencies and unusual items
Management and the auditor stated that substantial doubt exists about the company’s ability to continue as a going concern. Management planned to fund operations over the following 12 months with cash on hand, spending reductions, ATM sales, and/or other equity or debt financing; there is no assurance that additional financing will be available on acceptable terms.
In January 2017, the company announced a goal to reduce 2017 operating expenses by up to 30% versus 2016 through savings, staffing changes, and reduced corporate spending. It planned to prioritize reimbursement efforts, clinical studies, sales and training, and development of its stroke “soft suit.” Management planned to commercialize a stroke product in 2018; timing and regulatory clearance remain uncertain. A CMS coverage decision could take an estimated three to five years.
- Reimbursement remains largely case-by-case outside the VA policy; broad commercial coverage is not established. The company reported 199 pending insurance claims overall, including approximately 85 in the U.S. and 114 in Germany.
- The FDA had previously cited deficiencies in the mandatory post-market surveillance study. The company submitted a special 510(k), received a substantial-equivalence determination in July 2016, began the revised study in June 2016, and reported that the FDA considered the cited violations adequately addressed. The study remains ongoing; adverse findings or reporting delays could affect U.S. marketing.
- Four IPO-related securities class actions remained pending at the filing date; four similar actions had been dismissed on procedural grounds. The company said it could not estimate a loss range and recorded no litigation reserve.
- Nasdaq notified the company in December 2016 that it did not meet the $50 million market-value-of-listed-securities requirement. It had until June 12, 2017 to regain compliance; otherwise, delisting proceedings could follow.
- All manufacturing is conducted by Sanmina at one facility in Israel, creating supplier and geographic concentration risk. Foreign-exchange movements, product safety and liability, competition, and the limited clinical evidence for secondary health benefits are also material risks.
Important facts investors should verify
- Cash runway and financing capacity against operating cash burn, debt service, and the secured Kreos loan terms.
- Progress in reducing expenses, and whether reductions affect sales, customer service, clinical work, or regulatory compliance.
- Reimbursement outcomes, pending claims, VA placements, and customer concentration; distinguish units placed for VA clinical studies from placements under the VA coverage policy.
- Post-market surveillance study progress and FDA interactions, plus the status of Nasdaq listing compliance and pending IPO litigation.
- Whether the soft-suit development and planned 2018 commercialization remain achievable, including required clinical evidence and regulatory approvals.