Filing identity and reporting period
The supplied filing is ReWalk Robotics Ltd.’s unaudited Form 10-Q for the quarter ended September 30, 2020, filed November 10, 2020. This differs from the request metadata, which identifies Lifeward Ltd.; the summary below reflects the registrant named in the filing.
ReWalk develops and commercializes robotic exoskeletons and related rehabilitation products, including ReWalk Personal and Rehabilitation devices, ReStore, and newly distributed MyoCycle and MediTouch products.
Financial performance and liquidity
Amounts below are in U.S. dollars; financial statement amounts are converted from thousands to millions where shown.
| Metric | Three months ended September 30, 2020 | Three months ended September 30, 2019 | Nine months ended September 30, 2020 | Nine months ended September 30, 2019 |
|---|---|---|---|---|
| Revenue | $0.747 million | $1.234 million | $3.175 million | $3.692 million |
| Gross profit | $0.392 million | $0.649 million | $1.787 million | $2.010 million |
| Gross margin | 52% | 53% | 56% | 54% |
| Operating expenses | $3.461 million | $3.680 million | $11.010 million | $12.851 million |
| Operating loss | $(3.069) million | $(3.031) million | $(9.223) million | $(10.841) million |
| Net loss | $(3.336) million | $(3.389) million | $(10.031) million | $(11.976) million |
| Net loss per share, basic and diluted | $(0.18) | $(0.46) | $(0.71) | $(2.27) |
- Third-quarter revenue fell 39% year over year; nine-month revenue fell 14%. Management attributed the declines mainly to COVID-19 restrictions and limited market access. Personal unit revenue was $0.698 million in the quarter and $3.079 million for the nine months.
- For the nine months, research and development expense declined 37% to $2.695 million, while sales and marketing expense was nearly flat at $4.541 million and general and administrative expense declined 5% to $3.774 million. Management cited lower personnel, consulting, clinical-study, and non-cash compensation costs.
- Net cash used in operating activities was $10.131 million for the nine months, compared with $11.225 million in 2019. Investing cash outflow was $0.073 million; financing provided $11.948 million. Cash, cash equivalents and restricted cash totaled $18.736 million at September 30, including $18.050 million of unrestricted cash and equivalents.
- Total assets were $26.234 million and total liabilities were $9.445 million at September 30. Current assets of $23.305 million exceeded current liabilities of $7.645 million. Shareholders’ equity was $16.789 million.
- The filing reports $3.0 million of outstanding principal under the Kreos loan agreement. The balance sheet also includes the $0.392 million PPP loan; the company disclosed that forgiveness was confirmed on November 6, 2020. Kreos holds a first-priority security interest over company assets, including intellectual property, subject to permitted interests.
Material changes and notable events
- During the nine months, ordinary shares outstanding increased from 7.320 million at December 31, 2019 to 19.159 million at September 30, 2020. The July registered direct offering issued 4.938 million shares and warrants; the company reported approximately $9.0 million of gross proceeds from the offering and concurrent warrant placement. Total warrants outstanding were 10.305 million at quarter-end, creating potential dilution.
- The company added distribution arrangements for MyoCycle and MediTouch, and reported receiving Medicare provider certification and completing an additional contract with a German payor during the quarter.
- COVID-19 constrained customer access, product demonstrations, training, repairs and clinic purchasing. Management said it reduced personnel costs and other spending, while continuing remote customer engagement and strategic investment.
- Timwell notified the company in March 2020 that it would not fund the second and third tranches of a planned $20 million investment, leaving $15 million of contemplated funding unrealized. ReWalk said it continued to assess other routes into China.
Outlook, risks and contingencies
- Going concern: The company reported an accumulated deficit of approximately $178.5 million, operating cash outflow of $10.1 million for the nine months, and anticipated further losses. Management stated these conditions raise substantial doubt about the company’s ability to continue as a going concern. It expects to fund the next 12 months with cash on hand, spending controls and potential equity or debt financing; additional financing may be needed, and availability on acceptable terms is not assured.
- No numeric revenue or earnings guidance: The filing provides no quantified forecast. Management expects growth to depend on ReWalk Personal sales and reimbursement coverage, as well as ReStore and distributed-product sales. It expects higher volumes could improve gross profit, but launch-period margins and component costs could offset improvement.
- COVID-19 and operations: Continued restrictions could impair demand, customer access, clinical activity, collections, supply, production planning and access to financing. ReWalk depends on a single contract manufacturer, Sanmina, and a limited supplier base.
- Regulatory and product risks: The filing describes prior serious injury reports involving ReWalk Personal and a Class II recall whose termination the FDA confirmed in November 2019. The mandatory post-market study remained a risk: the company had enrolled 12 subjects by September 30, 2020 and was collecting real-world evidence under a modified protocol. Failure to satisfy FDA requirements or unfavorable results could affect U.S. marketing.
- Financing, dilution and listing: ReWalk identified potential additional equity or debt issuance, financing constraints under Form S-3, shareholder dilution, and Nasdaq listing compliance as risks. It had regained compliance with the cited bid-price and market-value/equity requirements, but warned future non-compliance could threaten its listing.
- Commitments and legal matters: Non-cancelable purchase commitments were approximately $0.9 million; contractual obligations totaled $8.716 million. IIA royalty obligations were contingent on applicable sales and totaled an estimated $1.6 million liability. A remaining shareholder lawsuit had no recorded reserve because loss could not be reasonably estimated; the First Circuit had affirmed dismissal, with a certiorari petition deadline of November 24, 2020.
Important facts for investors to verify
- Confirm the intended issuer: the supplied 10-Q names ReWalk Robotics Ltd., not Lifeward Ltd.
- Track cash burn, financing runway and whether management secures additional capital, given the explicit going-concern doubt.
- Assess recovery in sales and reimbursement, including the effect of COVID-19 on clinic demand, customer access and product placements.
- Review dilution from the increase in shares outstanding and the 10.305 million warrants outstanding at quarter-end.
- Monitor FDA post-market study progress, product safety disclosures, and any further regulatory action.
- Confirm the effects of PPP forgiveness and the status of Kreos debt, litigation, and contingent royalty obligations.