Business context and reporting period
ReWalk Robotics Ltd. (the registrant named in this filing; the request metadata identifies Lifeward Ltd.) filed this unaudited Form 10-Q for the quarter and six months ended June 30, 2021. The company designs and commercializes robotic exoskeletons and related rehabilitation products, including ReWalk Personal and Rehabilitation, ReStore, MyoCycle and MediTouch. Its principal markets are the United States and Europe.
Financial results and liquidity
| Metric | Q2 2021 | Q2 2020 | Six months 2021 | Six months 2020 |
|---|---|---|---|---|
| Revenue | $1.436 million | $1.668 million | $2.752 million | $2.428 million |
| Gross profit / margin | $0.727 million / 51% | $1.022 million / 61% | $1.434 million / 52% | $1.395 million / 57% |
| Operating loss | $3.141 million | $2.552 million | $6.162 million | $6.154 million |
| Net loss | $3.141 million | $2.855 million | $6.203 million | $6.695 million |
| Operating cash flow | Not presented by quarter | $(6.340) million | $(7.533) million |
Q2 revenue fell 14% year over year, while first-half revenue rose 13%. Q2 basic and diluted net loss per share was $0.07, versus $0.22; first-half loss per share was $0.15, versus $0.57. First-half sales growth was attributed mainly to more personal and rehabilitation units sold in the United States. Management said Q2 was the fourth consecutive quarter of sequential revenue growth.
At June 30, cash and cash equivalents were $64.236 million; current assets were $69.195 million and current liabilities $4.202 million. Total liabilities were $5.627 million, including operating lease liabilities; the filing reports no outstanding Kreos loan principal, which was repaid in December 2020. First-half financing cash inflow was $50.236 million, principally from the February 2021 private placement and warrant exercises. The company raised its outstanding ordinary shares from 25.3 million at year-end 2020 to 46.2 million at June 30, 2021. It reported an accumulated deficit of $187.648 million.
Material changes and management outlook
- Q2 cost of revenue rose despite lower sales; gross margin declined 10 percentage points year over year. Management attributed weaker margins to sales mix and higher service-related expenses.
- First-half operating expenses were broadly flat at $7.596 million. Research and development declined 17%, while sales and marketing rose 8% and general and administrative expense rose 5%.
- Management expects continued net losses and says profitability depends on successful commercialization and revenue sufficient to support the cost structure. It stated cash should support operations for more than 12 months after issuance of the statements, while noting additional funding may be needed before profitability or positive operating cash flow.
- No numerical revenue or earnings guidance is provided. Management expects growth from ReWalk Personal sales and broader reimbursement coverage, as well as ReStore and other products. It expects margins may improve with higher sales volume, but noted launch-period product margins and component costs could weigh on improvement.
Risks, contingencies and unusual items
- COVID-19 continued to constrain customer access, product demonstrations, patient trials and training, and rehabilitation-clinic budgets. Management could not predict the duration or full effect; supply-chain delays or component shortages were also possible.
- The FDA postmarket surveillance study had substantial enrollment shortfalls: 12 subjects enrolled, three completed, and one was using the device when the study closed in March 2021. Study data and real-world data were under FDA review. The filing warns that further FDA action could limit or stop U.S. marketing of ReWalk Personal.
- The company reported two battery thermal-runaway complaints, submitted regulatory reports and initiated a correction; implementation was completed in Europe and in its final stage in the United States. Product defects could lead to injury, recalls, liability claims or added costs.
- The company relies on a single contract manufacturer, Sanmina. Non-cancelable purchase obligations were approximately $1.307 million. A contingent IIA royalty liability was approximately $1.6 million, payable based on applicable product sales; operating and Harvard collaboration/license commitments are also disclosed.
- The filing says the company was not party to material litigation and had no off-balance-sheet arrangements as of June 30, 2021. Management stated disclosure controls were effective and reported no material change in internal control during the quarter.
Investor verification points
- Verify the registrant identity: this filing is for ReWalk Robotics Ltd., although the request metadata names Lifeward Ltd.
- Check subsequent revenue, gross-margin and cash-burn trends, including whether management’s stated liquidity runway remains adequate.
- Review reimbursement progress and U.S. sales dependence, including outcomes of the FDA’s review of postmarket-study data and any related requirements.
- Assess potential dilution from the 10.55 million warrants outstanding at June 30, 2021, in addition to share-based awards.
- Monitor COVID-19 effects, Sanmina supply continuity, product-safety matters, purchase commitments and royalty obligations.