ReWalk Robotics Ltd. (now identified in the request metadata as Lifeward Ltd.) — 2019 Form 10-K
Reporting period: Fiscal year ended December 31, 2019; this is an annual report, not a standalone fourth-quarter report. The filing issuer is ReWalk Robotics Ltd. The figures below are in U.S. dollars; financial statement amounts are generally in thousands unless noted.
Business context
The company develops and sells robotic exoskeletons for people with mobility impairments. Its products include ReWalk Personal and Rehabilitation systems for spinal cord injury, and ReStore, a soft exo-suit for stroke rehabilitation. ReStore received U.S. FDA clearance and European CE clearance in 2019 and began commercialization in June.
Financial results and liquidity
| Metric | 2019 | 2018 |
|---|---|---|
| Revenue | $4.873 million | $6.545 million |
| Gross profit / margin | $2.726 million / 56% | $2.825 million / 43% |
| Operating expenses | $16.774 million | $22.039 million |
| Operating loss | $14.048 million | $19.214 million |
| Net loss | $15.551 million | $21.675 million |
| Net cash used in operating activities | $14.815 million | $14.774 million |
| Cash and cash equivalents at year-end | $16.253 million | $9.546 million |
| Total assets | $24.372 million | $14.962 million |
| Total liabilities | $13.592 million | $13.017 million |
| Shareholders’ equity | $10.780 million | $1.945 million |
Revenue fell 26%, primarily because fewer units were placed with the VA for its ongoing clinical study. Personal-unit revenue was $4.674 million; ReStore contributed $199,000 from 16 units placed. Gross margin improved, which management attributed to a higher average selling price and sales mix for ReWalk Personal and lower inventory write-offs. Operating expenses declined across R&D, sales and marketing, and general and administrative functions.
Operating cash use remained broadly flat. Financing activities provided $21.482 million in 2019, principally through equity and warrant-related issuances, partly offset by loan repayments; cash, cash equivalents and restricted cash increased by $6.645 million. The company reported $6.965 million of Kreos loan principal outstanding at year-end, secured by a first-priority interest in substantially all assets. Current maturities of the loan were $5.438 million. The filing also reports $2.296 million of purchase obligations due within one year.
Material changes, outlook and risks
- Placements included 54 Personal units and 16 ReStore units in 2019, compared with 82 Personal and three Rehabilitation units in 2018. At year-end, 453 Personal units were in home or community use, versus 399 a year earlier; 119 Rehabilitation units were placed in centers in both years.
- Management expects to focus on commercializing ReStore, expanding reimbursement for ReWalk Personal, and continuing soft-suit and next-generation product development. It expects margins to remain near current levels or improve with volume and lower manufacturing costs, while noting ReStore launch costs and parts costs may constrain margins. No quantified revenue or earnings guidance is provided.
- The company and its auditor state that substantial doubt exists about the company’s ability to continue as a going concern. The company has incurred recurring losses, accumulated a $168.469 million deficit, and used $14.815 million in operating cash in 2019. Management expects to rely on existing cash, expense reductions, and additional equity and/or debt financing; it cautions that financing may not be available on acceptable terms.
- The planned remaining $15 million investment from Timwell was uncertain: management said it did not expect to complete the remaining tranches on the original terms and might not reach a revised agreement. The company was exploring other China-market paths.
- In February 2020, after year-end, the company completed an offering of 5.6 million common and pre-funded units at approximately $1.25 per unit. The filing describes the offering as raising about $7.0 million in gross proceeds. Such financing and outstanding warrants create dilution risk.
- Material operating risks include limited and inconsistent third-party reimbursement, a single contract manufacturer, product safety and regulatory requirements, and a mandatory FDA post-market study with enrollment progress described as inadequate. The FDA had terminated a Class II recall in November 2019, but a January 2020 510(k) submission for revised labeling and device changes received a refuse-to-accept designation.
- One IPO-related securities class action remained on appeal; the company said it could not estimate a possible loss and recorded no litigation reserve. The filing also discusses Nasdaq listing risks and reports that the share price had been below $1 since February 6, 2020.
Most important facts for investors to verify
- Confirm issuer identity and corporate name: this filing is for ReWalk Robotics Ltd.; the request metadata names Lifeward Ltd.
- Review the going-concern opinion, the company’s cash runway and subsequent financing needs, including the February 2020 offering’s net proceeds and warrant dilution.
- Reconcile liquidity disclosures: the auditor’s discussion and notes refer to a working-capital deficiency, while the presented year-end balance sheet shows current assets of $21.073 million and current liabilities of $10.168 million.
- Check cash-flow and expense descriptions against the audited statements. For example, the MD&A says net financial expenses increased in 2019, although the reported amount declined from $2.466 million to $1.496 million; the filing text does not consistently explain this discrepancy.
- Track progress and FDA feedback on the ReWalk post-market study and the revised 510(k), as well as actual reimbursement decisions, ReStore adoption, and unit placements.
- Review Kreos repayment terms, collateral, and potential refinancing; also monitor the Timwell/China discussions, the securities-litigation appeal, and Nasdaq listing compliance.