Filing summary
Issuer and period: The supplied filing is ReWalk Robotics Ltd.’s unaudited Form 10-Q for the quarter ended March 31, 2016, not a filing under the name Lifeward Ltd. ReWalk develops and sells personal and rehabilitation exoskeleton systems for people with mobility impairments. Amounts below are in U.S. dollars unless noted.
Financial results and liquidity
| Metric | Q1 2016 | Q1 2015 / prior balance-sheet date |
|---|---|---|
| Revenue | $2.061 million | $635,000 |
| Gross profit / margin | $493,000 / 24% | $33,000 / 5% |
| Operating expenses | $6.908 million | $5.554 million |
| Operating loss | $6.415 million | $5.521 million |
| Net loss | $6.922 million; $0.56 per share | $5.706 million; $0.48 per share |
| Cash used in operations | $6.937 million | $6.162 million |
| Cash and equivalents | $21.809 million | $17.869 million at Dec. 31, 2015 |
| Total debt carrying value | $10.141 million | No loan balance shown at Dec. 31, 2015 |
| Current assets / current liabilities | $28.779 million / $7.300 million | $23.776 million / $4.343 million at Dec. 31, 2015 |
- Revenue grew 225%, principally due to ReWalk Personal sales. The company placed 32 units, including 31 Personal units, compared with 13 total units in the prior-year quarter.
- Gross margin improved as more units were placed, but the company remained loss-making. R&D increased 10%, sales and marketing 31%, and general and administrative expense 28% year over year.
- Q1 financing cash flow was $11.006 million, largely reflecting a $12 million Kreos loan draw, offset by repayments and debt issuance costs. Cash increased by $3.940 million during the quarter.
- The balance sheet showed $2.626 million of current loan maturities and $7.515 million of long-term loan liabilities. The $20 million Kreos facility carried 10.75% annual interest; an additional $8 million could be drawn only if specified equity-raising conditions were met.
Material changes, outlook, and risks
- Growth was substantially driven by ReWalk Personal revenue, including sales to the U.S. Veterans’ Administration for its clinical study. The company said it expected future growth to depend on sales through third-party payors.
- Management said cash resources, together with potential access to the Kreos facility and ATM program, were sufficient for anticipated needs for at least 12 months. Expected spending priorities included sales, marketing, reimbursement expansion, R&D, and next-generation products. No specific revenue or earnings guidance was provided.
- On May 10, 2016, after quarter-end, the company entered an agreement allowing up to $25 million of ordinary shares to be sold through Piper Jaffray. No shares had been sold under the program as of that date. Sales could dilute existing shareholders.
- The FDA had raised concerns about the post-market surveillance study and whether a new pre-market filing was needed. The company reported that it submitted a special 510(k) on April 11, 2016, and that the study protocol was approved May 5, with initiation required within 30 days. Failure to meet FDA requirements or unfavorable study results could lead to restrictions on U.S. marketing.
- The company reported recurring losses and negative operating cash flow, but stated it had sufficient funds for the next 12 months. It relied on one contract manufacturer and had $1.5 million of non-cancelable purchase commitments. A single customer represented 60% of trade receivables at March 31, 2016; the filing also reports a 71% major-customer revenue share, though the comparison-period column heading in that table is unclear.
- Debt was secured by a first-priority interest in substantially all assets, including intellectual property. Contractual obligations totaled $18.946 million, including debt, leases, and purchase commitments.
Most important facts for investors to verify
- Confirm the issuer identity: the supplied 2016 filing is for ReWalk Robotics Ltd., notwithstanding the Lifeward Ltd. request metadata.
- Track whether the company met FDA submission and study deadlines, and review subsequent FDA decisions and study outcomes.
- Assess whether unit growth and reimbursement coverage can improve gross margins and reduce continuing operating cash burn.
- Review Kreos repayment terms, security over company assets, and whether additional borrowing or ATM share sales occurred.
- Clarify customer concentration disclosures, especially the reported 71% revenue share and its comparison period.