ReWalk Robotics Ltd. — Form 10-Q Summary
Reporting period: Quarter and six months ended June 30, 2022. The filing is under the name ReWalk Robotics Ltd.; the company develops and sells robotic exoskeletons and rehabilitation products. Financial amounts below are in U.S. dollars.
Business context and key financial metrics
| Metric | Q2 2022 | Q2 2021 | Six months 2022 | Six months 2021 |
|---|---|---|---|---|
| Revenue | $1.570 million | $1.436 million | $2.446 million | $2.752 million |
| Gross profit / margin | $0.746 million / 48% | $0.727 million / 51% | $1.011 million / 41% | $1.434 million / 52% |
| Operating expenses | $5.122 million | $3.868 million | $9.675 million | $7.596 million |
| Operating loss | $4.376 million | $3.141 million | $8.664 million | $6.162 million |
| Net loss | $4.446 million | $3.141 million | $8.796 million | $6.203 million |
| Loss per share, basic and diluted | $0.07 | $0.07 | $0.14 | $0.15 |
- At June 30, cash and cash equivalents were $78.832 million; total current assets were $83.753 million and current liabilities $3.799 million. Total liabilities were $4.885 million, including $0.817 million of operating lease liabilities. The filing reports no borrowings on the balance sheet.
- For the first six months, operating cash use was $9.377 million, investing cash use $0.018 million, and financing cash flow was zero. Cash, cash equivalents and restricted cash declined $9.395 million to $79.491 million.
- Revenue is generated from personal and rehabilitation units, rentals, parts and warranties. In Q2, revenue growth reflected more personal units sold in Europe and more distributed products sold in the U.S.
Material changes versus the prior comparable period
- Q2 revenue rose 9% year over year, while first-half revenue fell 11%, primarily due to fewer personal and rehabilitation units sold in the U.S. in Q1 2022.
- Gross margin declined to 48% in Q2 and 41% for the first half. Management attributed the pressure to freight and service costs; first-half results also reflected lower Q1 unit volume and a less favorable sales mix and average selling price.
- Operating expenses increased 32% in Q2 and 27% for the first half. Higher sales and marketing spending was associated with consulting, trade shows and personnel; R&D increases reflected personnel and subcontractor costs; G&A growth was mainly tied to professional services for the 2022 proxy process.
- First-half net loss increased to $8.796 million from $6.203 million, and operating cash use increased by about $3.0 million. The share count used for loss per share was substantially higher than in 2021.
Outlook, commentary and risks
- Management stated that available cash was sufficient to support operations for more than 12 months from the financial statements’ issuance date. It expects continued losses and says additional funding may be needed until profitability or positive operating cash flow is achieved; no quantified revenue or earnings guidance is provided.
- Management expects growth from ReWalk Personal sales to third-party payors and from ReStore and other products. It expects gross margin to benefit from higher sales volume, but noted potential offsets from lower-margin ReStore and distributed products and higher component costs.
- The FDA was reviewing the company’s June 2022 510(k) application seeking clearance for ReWalk Personal use on stairs and curbs. CMS made no preliminary coverage or payment determination at its June meeting; the company expected further feedback in the second half of 2022.
- COVID-19 continued to constrain customer engagement, trials, training, rehabilitation-center demand and delivery or servicing. The company also cited supply-chain delays and component shortages, with Sanmina identified as its sole manufacturer.
- In June, the board authorized a share repurchase program of up to $8.0 million, subject to Israeli court approval. Court approval was received in July, with the program valid through January 20, 2023; repurchases are discretionary and funded from working capital.
- Other exposures include customer concentration (two customers represented 20.4% and 11.7% of first-half revenue), $1.1 million of non-cancelable purchase commitments, and a contingent $1.6 million IIA royalty obligation payable from applicable product sales. The filing states the company was not then party to material litigation.
Important facts for investors to verify
- Whether CMS establishes a reimbursement pathway for ReWalk Personal and whether the FDA clears the stairs-and-curbs feature.
- Whether revenue growth can resume across periods and support improved gross margins despite cost, product-mix and demand pressures.
- Cash burn relative to management’s stated runway, and whether additional financing or equity issuance becomes necessary.
- Actual repurchases under the $8.0 million authorization and the impact on working capital and share count.
- Ongoing effects of COVID-19, reliance on Sanmina, customer concentration, and potential dilution from outstanding warrants and equity awards; 19.4 million warrants and options were excluded from diluted loss per share as anti-dilutive.