ReWalk Robotics Ltd. (now identified in the request as Lifeward Ltd.) — Q3 2021 Form 10-Q
Quarter ended September 30, 2021; comparative results are for Q3 and the nine months ended September 30, 2020. Financial statements are unaudited. Amounts below are in U.S. dollars.
Business context
The filing registrant is ReWalk Robotics Ltd., an Israeli medical-device company developing and commercializing robotic exoskeletons. Its products include ReWalk systems for spinal cord injury, ReStore for stroke rehabilitation, and U.S.-distributed MediTouch and MyoCycle products. Sales are concentrated in the United States and Europe.
Key financial metrics
| Metric | Q3 2021 | Q3 2020 | Nine months 2021 | Nine months 2020 |
|---|---|---|---|---|
| Revenue | $1.972 million | $0.747 million | $4.724 million | $3.175 million |
| Gross profit / margin | $1.140 million / 58% | $0.392 million / 52% | $2.574 million / 54% | $1.787 million / 56% |
| Operating loss | $2.662 million | $3.069 million | $8.824 million | $9.223 million |
| Net loss | $2.675 million | $3.336 million | $8.878 million | $10.031 million |
| Net loss per share | $0.06 | $0.18 | $0.21 | $0.71 |
- Q3 revenue grew 164% year over year; nine-month revenue grew 49%. Management attributed growth to more personal and rehabilitation units sold in the U.S. and Europe, including a multiple-unit university order.
- Q3 gross margin improved, reflecting higher unit volumes and average selling prices, partly offset by sales mix. Nine-month margin declined due to mix and higher service costs, partly offset by higher average selling prices.
- Operating expenses were $3.802 million in Q3 and $11.398 million for nine months. For nine months, research and development decreased 17% to $2.243 million, while sales and marketing rose 12% to $5.105 million and general and administrative rose 7% to $4.050 million.
- Cash and cash equivalents were $91.227 million at September 30, 2021, versus $20.350 million at December 31, 2020. Current assets were $96.330 million and current liabilities $4.381 million. The filing reported no outstanding Kreos loan; it had been repaid in December 2020.
- Nine-month operating cash use was $8.903 million, investing cash use $0.028 million, and financing cash inflow $79.808 million. Financing proceeds reflected equity offerings and warrant exercises. Management stated cash was sufficient for more than 12 months after issuance of the statements.
- Outstanding ordinary shares increased from 25.3 million at December 31, 2020 to 62.4 million at September 30, 2021, primarily reflecting equity offerings and warrant exercises. The filing also reported 19.5 million warrants outstanding at quarter-end.
Changes, outlook and material risks
- September’s registered direct offering and related warrant issuance, together with earlier 2021 financing and warrant exercises, substantially strengthened liquidity but materially increased the share count and potential dilution.
- Management expects continued losses and says a transition to profitability depends on successful commercialization and revenue sufficient to support the cost structure. No specific revenue, earnings or cash-flow guidance is provided. The company expects to fund operations with cash on hand and potentially further equity or debt offerings, warrant exercises, or strategic financing; future fundraising and profitability are not assured.
- Management expects growth from ReWalk Personal sales and broader third-party reimbursement, as well as ReStore and other products. It expects margins may improve with sales volume, but warns of lower expected margins on ReStore and distributed products and higher component costs.
- COVID-19 continued to constrain patient trials, clinic access, demonstrations, training and customer budgets. The company also cited supply-chain delays and component shortages; Sanmina is its sole manufacturer.
- The FDA post-market surveillance study for ReWalk Personal had enrollment problems; the study closed in March 2021 with 12 subjects enrolled, below the original target. Submitted study and real-world data were under FDA review. The filing warns that regulatory action could limit U.S. marketing if requirements are not met or results are unfavorable.
- The company reported two battery thermal-runaway complaints and a related correction; the correction was closed in Europe and remained ongoing in the United States. Product defects could lead to injury, recalls, costs and reputational harm.
- Other commitments include approximately $1.4 million of non-cancelable purchase obligations, $425,000 of Harvard collaboration/license obligations in the contractual-obligations table, and a contingent IIA royalty liability of approximately $1.6 million payable based on applicable product sales. Management said ordinary-course legal matters were not expected to have a material adverse effect.
- The company received FDA breakthrough-device designation for ReBoot, a soft exoskeleton intended for stroke home and community use. This is not a commercialization or approval guarantee.
Important facts for investors to verify
- Confirm current cash, operating cash burn and runway, and whether subsequent spending or financing has materially changed the September 2021 liquidity position.
- Assess the fully diluted share count, outstanding warrant terms and potential dilution following the substantial 2021 equity raises.
- Track FDA review and resolution of the post-market surveillance study, including any required follow-up, and the status of the U.S. battery correction.
- Verify whether COVID-related sales constraints, supply shortages and reliance on a sole manufacturer have eased, and whether revenue growth and gross margins are sustainable.
- Monitor reimbursement progress, particularly CMS and third-party coverage, and commercial adoption of ReStore, ReBoot and distributed products.