Good morning, everyone and welcome to the ReWalk Robotics Fourth Quarter Earnings Conference Call. All participants will be in a listen-only mode. [Operator Instructions] After today’s presentation, there will be an opportunity to ask questions. [Operator Instructions] At this time, I’d like to turn the conference call over to Mike Lawless, Chief Financial Officer. Sir, please go ahead.

Thanks, Jamie. Good morning and welcome to ReWalk Robotics fourth quarter and full year 2022 earnings call. I’m Mike Lawless, ReWalk Robotics’ Chief Financial Officer, and with me on the call are; Larry Jasinski, ReWalk’s Chief Executive Officer; and Almog Adar, ReWalk’s Vice President of Finance. Earlier this morning, ReWalk issued a press release, detailing financial results for the three months and full year ended December 31, 2022. This press release and a webcast of this call can be accessed through the Investor Relations section of the ReWalk website at rewalk.com. Before we get started, I’d like to remind everyone that any statements made on today’s conference call that express a belief, expectation, projection, forecast, anticipation, or intent regarding future events, and the company’s future performance may be considered forward-looking statements as defined by the Private Securities Litigation Reform Act. These forward-looking statements are based on information available to ReWalk management as of today and involve risks and uncertainties, including those noted in our press release and ReWalk’s filings with the SEC. Such forward-looking statements are not guarantees of future performance. Actual results may differ materially from those projected in the forward-looking statements. ReWalk specifically disclaims any intent or obligation to update these forward-looking statements, except as required by law. A replay will be available shortly after completion of the call accessible from the dial-in information in today’s press release. The archived webcast will be available in the Investor Relations section of the company’s website. For the benefit of those who may be listening to the replay or archived webcast, this call was held and recorded on February 23rd, 2022 – 2023, excuse me. Since that date, ReWalk made subsequent announcements related to the topics discussed. So please reference the company’s most recent press releases and SEC filings for the most up-to-date information. With that, I’ll turn the call over the ReWalk’s CEO, Larry Jasinski.

Thank you, Mike. Good morning. Thank you for joining us today. We closed 2022 with positive results in Q4, and more importantly, with progress on each of our major areas of focus to drive the business over the next three years. The goals of 2022 were to move forward with CMS, to expand acceptance of direct supply in Germany, to improve the ReWalk system by adding curb and stair climbing features in the US, and with an advanced model of the ReWalk that can improve the user experience, and to identify additional product offerings to build our critical and strategic mass that improves our financial performance. Sales in Q4 were $2.18 million, driven by new VA activity post-COVID. The provision of systems from direct supply acceptance in Germany, and the growth with the distributed MyoCycle product. The MyoCycle is an excellent example of the efficiency and value of an adjacent offering and a model for adding more products. Mike will address our results further in the financial discussion. During 2022, we requested a benefit category in the public hearings with the Healthcare Common Procedure Coding Systems, known as HCPCS, under our established coverage code. CMS has not yet provided the category in pricing, but instructed us to begin the process of submitting cases. The first Medicare patient received their system during Q4 and has completed their training program. The category and pricing are still in processing with a Medicare Administrative Contractor, the MAC. We are now moving ahead with multiple patient submissions and building the required infrastructure to replicate this very large number of patients on an ongoing basis. In November, BARMER, the second largest statutory health insurer, the SHI, in Germany, elected to adopt direct supply and withdrew their Federal Social Court challenge. They immediately supplied the individual from…

Thanks, Larry. For most of my discussions of the financial results, I’m going to focus on the Q4 performance as our press release and 10-K address the annual results. For the fourth quarter of 2022, ReWalk reported revenue of $2.2 million, up $0.9 million or 75% as compared to $1.2 million in the fourth quarter of 2021. The increase in quarterly revenue was a result of improved sales performance across product lines and geographies. For our core Exoskeleton product line, we experienced growth in volumes in both the US and EU, both from a year-over-year standpoint versus Q4 ‘21 and on a sequential basis from Q3 ‘22. We also had strong performance in Q4 from our distributed MyoCycle FES products. We market these as an exclusive distributor to US rehabilitation clinics, VA hospitals, and to veterans for home use. Since we started distributing this product line in 2020, we have steadily grown it and achieved revenue of over $0.5 million in Q4, marking by far our highest quarterly performance for this product line. I also want to briefly comment on the annual revenue performance. For the full year 2022, we achieved revenue of $5.5 million as opposed to $6.0 million for the full year 2021. The decline in revenue was a result of two factors, first in 2021, we had a large one-time multiple units shipment to an academic medical center, that was a departure from our typical sales and which did not reoccur in 2022. Second, during 2022, we had a significant foreign exchange headwind due to the erosion of the euro-dollar exchange rate. Excluding the impact of these two factors, revenue would have increased by 10% in 2022, reflecting growth in our underlying base business. Now, I will transition to our pipeline. With increased revenue performance in Q4,…

Thank you, Mike. Our goals for 2023 are; one, to achieve sales growth via our CMS and VA activity along with adding more commercial insurance in Germany, two, to expand our product offering to distribution and acquisition, and to leverage these activities to move towards breakeven profitable operations with our current capital. The internal sales growth will build upon the 2022 progress on direct supply in Germany, with the placement of systems with US Medicare program with CMS, and with expansion to more VA centers. Other growth drivers will be technical and regulatory advancements of the ReWalk Exoskeleton and expansion of the company through the addition of product lines. To measure our progress in 2023, I have seven areas I’d like to highlight. Number one, expansion of CMS case submissions, we are building our infrastructure for qualifying and processing claims within the expected requirements of the regional MACs with CMS. These are extensive submissions to ensure patient selection is optimal to become successful ReWalkers. This approach will benefit the user, CMS, other insurers and the company with successful use of the product. We will target between 35 to 50 CMS submissions in 2023 by building an infrastructure to expand that significantly in 2024 and 2025. Until late 2022, our US coverage was limited to the VA SOP, which comprised approximately 10% of the spinal cord injury market. Spinal cord injury occurs in a younger population in five years post-injury approximately 30.9% of the spinal cord injury market is covered under Medicare, and another 25.2% are covered under Medicaid. We also anticipate the progress to CMS will be considered by private payers and we will begin contacts with private insurers as the market develops. These activities allow us to develop this market with the new access to a larger audience. As…

[Operator Instructions] And our first question today comes from Swayampakula - Ramakanth from R.C. Wainwright [sic - H.C. Wainwright]. Please go ahead with your question.

Thank you, and this is RK from H.C. Wainwright. So – good morning, gentlemen. It looks like we had a fantastic fourth quarter and it started in a really interesting ‘23 as well. Larry, you stated you know seven different things that you’re hoping to execute with the rest of the year. So, you know, given the true positives from last year, especially from the CMS and also from the German Court, can you just highlight some of the progress that you’re making beyond the initial success in the sense, you know, you said you submitted one application to the MAC, you know how well are they progressing? You know, is the progress encouraging enough that you can go forward with additional submissions? And on the German Court side, you know you said the insurance company over there has given or has started working through the applications for their insured lives. How is that going forward? What is the expectation in terms of revenue run from that particular worker’s comp insurance?

Okay, I’ll –

Sorry for the long question.

That’s a long question. But I took notes. So I think I’ll remember everything or at least most of it. And first, yes, it was a good quarter and the seven targets we believe are very achievable for us this year, the things that I highlighted at the back end, and I’ll update those every quarter. Regarding first, the MAC process and the progress. You know submitting the first case is the hardest, because you’re interpreting and put everything and trying to establish the standards for that case. And we use that as a base for, okay, how do we construct the rest of them. And that’s really been a lot of infrastructure building and also to make sure that we comply in every way as a Medicare supplier, we’re an accredited supplier and that requires everything must be handled perfectly relative to HIPAA compliance in how we’re handling data, and in the systems that we have. So, there was a lot of internal auditing preparation for the Go Live mindset. And that’s really the great value of case one. Because case one, we put more effort in than we probably put in anything for a long time relative to a single case, to make sure we have that structure, because we’re not trying to set this up for just one case. We’re trying to set it up to do as I said 35 to 50 this year. So it’s been a process development. So from an internal side, we’ve come a long way. On the MAC side, you know the case is moving forward, but I don’t have anything I can report at this time, you know the most important thing is the user has their system, they’ve completed their training and the completion of the process is now…

Thanks for that, Larry. And then this Court case, where BARMER fortunately for you walked away from the case. Does that, they as a strong precedent within Germany’s worker’s comp so that now you have a potential for success with other worker’s comp. Is that the case? Or is it still going to be individually each worker’s comp insurance can make a decision independent of what happened in the BARMER’s Court case?

One quick clarity, BARMER is a statutory health insurer. So it’s the more the general public insurance and private insurance that goes through their German health system. The workman’s comp in Germany is the DGUV and we have a contract with them. So our workman’s comp in Germany is well established relative to the statutory health insurers and BARMER which where your question was, is, you know they will make a decision as to whether they ended the contract and other groups. That they have a decision whether or not they join a contract. But we do not believe there’s a strong basis for any of them to challenge whether or not if they supply these whether they’re under direct supply or not. There is, as BARMER withdrew and accepted, there is no formal Court case decision. So I can’t say there was a Court case that is a precedent, however, because that would have gone so far. And the number one, two, three insurers in Germany now have all accepted this would be difficult for others to claim that it is not the standard in the industry. But I can’t say there’s a specific precedent, if that answers your question.

Okay, thank you. I have one more two-part question and then I’ll step back into the line. In terms of the VA expansion that you’re talking about VA training center expansion that you’re talking about, you know, is there more color you can provide us in the sense, I believe if I took my notes right, there are 16 cases in rentals out there. I’m guessing most of them are from the VA, you know is, should we expect that to increase as you continue to expand this training centers? And the second part of the question, a little bit different on the MyoCycle product distribution, which was strong in the Q4 you know, increasing greater than 0.5 million. Is that something that can be sustainable over ‘23 and beyond or is this one of those one-off things that we have to wait and watch as the quarters progress?

Okay, thank you. I’ll start with the VA. We still have a good number of veterans waiting in line for training or waiting to move through processing at the VA, and a lot of the limitation has been around either available personnel to train or geographic location. So this expansion with the VA, you know, presently, we have three really reliable centers that can take care of patients. But that only covers three parts of the United States and they’re mostly in the Central, South and Southeast, which we need to expand it more geographically. So the veterans in places that do not have access are there. And what we’ve done in one of our more recent successes was with the program where the community care networks were able to get a VA to cover it. But the training was done locally at a community care network. So this expansion of six additional centers that are utilizing it will provide us the ability to get to more patients, because we just have patients that are in locations that cannot currently get their training done. And what’s different now you know post-COVID, with a very few exceptions, the VAs are fully reopened and we have found them much more interested in moving with these community care networks where they didn’t have the resource or the people to do it. So the VA, I think, is, if you’re a veteran now it’s a good time to go back and reach to these groups, where you will be able to get training and move to the process if you’re a qualified patient. On the MyoCycle, first, it’s a really good product, and it works easily for the exact same patients we already call on. So a ReWalk user is very commonly also would benefit with a MyoCycle and the VA covers on them. So we do believe it’s sustainable. I don’t know what the exact quarter-to-quarter number, but the year-over-year product line has very good potential and expectation that it would grow. And that’s the type of products that we think fit nicely with us. So sustainable, yes, on an annual basis.

Thank you. Thank you very much for that, Larry. I appreciate that.

Our next question comes from Martin Pollack from KMTR. Please go ahead with your question.

Yes, just several questions, I’ll kind of break it down into a couple more about the actual Germany, you know, Court decision, and then maybe talk about a few financial ramifications of actually what we’re seeing as numbers. On the German Court is, a way for you to describe, if not immediately, the number of leads that you would be expecting since the insurance coverage are so broad now, you would think that that German business would be significantly higher multiples higher than what it is today? So maybe it’s a matter of just as describing that via leads, and what could end up being a ‘24, ‘25 sales revenue type number. That would be very useful to know, because I think that decision is not well received by the marketplace had very little impact on the company’s stock price, that overall the stock were declined somewhat after that period. So please explain that German Court decision and its long-term impact?

Okay, I’ll start with that. Well, firstly, the German Court case was withdrawn. So there wasn’t a formal decision, but it was a clear acceptance by the number two insurer. So it was good outcome, especially for the patient. The impact of that is, you know, we saw the Court cases that were in line for direct supply direct processor. So that’s a good sign. Now, I think you’ve hit the most important point, how does that translate to leads and growth for ‘23, ‘24, ‘25. And we have not done well in leads with Germany during the COVID period, we literally were in a desert for most of the last two years relative to leads with no trade shows, and a population that has it’s of higher risk during the COVID period. So, we’ve got to rebuild that lead element. And that is a lot of our early focus to get those leads going to get and get these cases back into the insurers at much higher numbers. So our early focus in 2023 and 2024 is and we think we’re going to have trade shows in full again, is to build back to the lead levels we saw pre-pandemic then those would translate into things that are more easily processed through the insurers with the acceptance of direct supply. So the impact is going to be there, but it’s going to be there more later this year, our cycle time for most of these patients still remains you know 6 to 12 months, depending on the specifics of all the individuals from the time they think about it to the time they’ve been restraining. So that building of leads this year will be an important measurement. It will affect sales some this year, but it’ll impact sales, if we do it effectively more in the out years.

And let’s deal with some of the financial ramifications of what we’re seeing. 2022 close with about $21 million of operating expenses, broken down between R&D, marketing and sales and SG&A. You know, you look back at 2021, actually, even ‘19, you know, you were running about $13 million, which explain why as bad as things have been at that time, you were generating an operating loss of $12 million to $13 million per year. We certainly you know looking at considerably higher loss, which means that the cash which is considerable. So as we look forward, if you could talk about maybe the absolute type number, what is SG&A on a normalized basis, going forward with your plans? Clearly, you have plans to grow a number of expenses may be rising, but are you likely be outrunning revenues during that time so we should realistically expect further losses this year, even worse, and possibly 2022. I mean, I’m really looking to see how you think about SG&A, because you also talk about ultimately, a model that can go to breakeven. Without an acquisition is a model that can actually do that? And when do you expect that to happen?

Right. There’s parts of that for me and parts of that for Mike. I think looking backward on some of the operating expenses. I’ll let Mike start there and I’ll pick up on the other side.

Yeah. So I would say that, you know, we did see an increase in spend in 2022 versus 2021. And much of that was related to several factors, one was, gearing up and entering into this process of submitting claims to Medicare, as Larry had described, that’s quite, you know, for the first time, that’s quite a costly and time-consuming process to do it correctly. And so we had to invest in resources to be able to be in a position to be able to do that. Another factor was that, we were completing several product improvements and for new product introductions in 2023 and probably early 2024. So there was some product improvements going on. So there’s some R&D spend that increased as a result of that factor. So I would say that those were the two primary things we’re really gearing up commercially for. And then the third thing was gearing up commercially for being able to sell to an expanded market, being the Medicare market in addition to the existing markets that we sell now. So yes, there was an increase in investment between 2021 and ‘22. But that’s all related to these key priorities that we’ve talked about. And it’s gotten to this point now, where we really feel like we’re, you know, we’re very close to the finish line or very close to the goal line, if you want to use the football analogy. So, you know, I would expect that, you know, once we can, you know, normalize the process and increase the volumes of patients submissions to Medicare, that, you know, the revenue is going to build off of that and these investments will begin to pay off.

Are you suggesting that, let’s say the new normal for the SG&A may, in fact, be even lower going forward, because of these kind of one-time situations that you know we had last year? It would be great to see that, because clearly, if you continued to be this level even higher, you would have to have a significant growth in revenues just to be able to you know, maintain certainly not burn more cash and you’re doing already.

Yes.

So, the only other question is, I will say what I thought was quite positive and these results in terms of the cash use as I see for this quarter was considerably lower considering you said, there were about $3.3 million of spend on the share repurchase. Was that what you said? I think I saw that in the comment.

Yeah, that’s the –

That was in the –

That’s the cumulative amount – yes, -

Cumulative, but – I didn’t see the cash flow statement, but it looked to me, cash use would have been much better than we saw in the previous quarter or two, cash use was more like $3 million maybe for the quarter.

Well, we had significant also expenses in Q2 and Q3 related to the expanded proxy challenge that we had signed, that unfortunately before it required us to divert a lot of resources that otherwise could have been spent on you know growing the business or preserving that capital. So, you know, it’s also another factor that drove some of the increase from ‘21 to ‘22. That, you know, we hope will not repeat itself.

So would you say that as we’re looking at cash burn, which clearly at this point, is just, you know, the thing that’s going to continue so our hope is that we’re not going to be running into the kind of numbers we saw in ‘22 overall, but you think that call it sustainable, you know, cash use, you know, ex, even share repurchases could be about $12 million, $13 million, is that more likely to be the kind of number that you’re thinking about annually? Are we back to that kind of earlier level? Since you’ve done a lot of that forward spending already? I mean, there’s a big difference in terms of how quickly this cash is going away?

Yeah, I think until we get a better sense for the ramp you know for the timing and our anticipated Medicare coverage and benefit establishment and the ramp associated with that benefit, it’s a little premature for us at this stage to comment, you know, on full year numbers, but I would say that certainly we will be exiting the year in a, you know, we anticipate we’ll be exiting the year in a much better position than we are right now, because we will have that expanded market with that much larger revenue potential.

Last question, just maybe this is more like Larry, outlook, your outlook in previous quarters, that last one was that based on your you know, what you were seeing revenue growth, you know, would continue? And then in the last quarter, apparently that did not happen. When you think about full year outlook with all these things, you know, going on with all the opportunities, is there any reason why you wouldn’t be able to make a more clear statement about growth for 2023? And at the same time, I just make a comment about acquisition opportunities, it seems that an acquisition, another vertical for the company is essential, even if it’s an adjacency clearly would be great. But the ability to integrate a company and provide some stable revenues and maybe income would make a lot of sense. Quite a bit of sense while you’re building this tremendous growth engine, which I think is very powerful. But you know, it may still take two, three years for us to see the full effect. So why not in the interim, really get down to an acquisition. And is there one that or one or two that you’re actually dealing with or negotiating with? Because I think we were led to understand in previous calls, that that’s a very big factor in your expectations, lacking down an acquisition with using the current cash balance that you have.

Okay and I’ll – Marty I’ll comment on –

Because –

Yeah, well I’ll try to comment properly on these for you. On 2023 growth, the biggest variable to us is the timing of when CMS will process and pay. So a lot of our focus this year is fill the funnel. You know that’s why we want to do the 35 to 50 submissions. Remember, we’ve placed one last year and that’s one in our whole history relative to CMS. That was the first one. So this year, it’ll be up to another 49 more. How many of those may make it or not make it in through the process? We can’t forecast that yet. But there’s reason to be optimistic, but I just don’t have any timelines that I can give you out of the final details with CMS at this point. On the acquisition side, you know when we look at the infrastructure we built, that can manage everything from the complexity of Medicare claims and then complexity of a product for spinal cord injury. We have a particularly strong team and what we learned under adding a product with the MyoCycle through the distribution agreement was that, we were able to very effectively do that, and it helped to leverage our cost. So what we’re looking to do part of this is, we must grow SCI, we will grow SCI, we’ve got all the pieces go in the right way. Putting some things parallel to that makes a great deal of business sets. We have put in extensive amount of effort and spoken with many potential groups in the landscape. But there’s nothing I can comment more on that at this time that there, we have interest and others have interest, we’ve got to see if something makes sense at the end of the day, and we’ll report it if we get there.

Because essentially and with regard to your outlook at this point to, you know, really, you think so look good, but you’re not committing yourself to a growth outlook for 2023. Is that the way to understand your comments? Or you just don’t want to talk about outlook, because you’ve just said that?

Well, I’ll try to be more specific. We will grow, we believe our numbers will be bigger this year than last year. And you know, we have a particular goal in our plan, but we don’t get public guidance on it. The question to us is, how much we grow and how quickly, but this will be growth year? We’re very [technical difficulty].

All right, thank you. Appreciate it.

Okay. Thank you, Marty. And I would just –

[Operator Instructions] And our next question comes from [Charles Lucario] [ph] from GTM. Please go ahead with your question.

Yes, thank you for taking my call. I appreciate it and excellent job on actually the revenue and actually turning the company around. You know, again, the people out there, the handicapped community is probably happy that you guys are doing a great job at everything. My first question comes from the FDA 510 you guys are sitting over there at the, you know, the FDA. When and if it does get approved? And again, I hope it does, what kind of an impact will that put on the product in the sales going forward? And is there any competitors out there that are using something similar to what’s already out there in the marketplace?

Well, first, the biggest impact is the user is given access to places they can’t go. And you know that’s why we’re here. What will it do for sales, I believe as we are expanding, particularly with CMS, that is a innovative feature and why we were given a breakthrough designation by FDA for that stairs climbing component, it should have an impact and help us pull more patients through the system. Competitively there is not a product in the world other than ours that can do this. So, it puts us also in a competitive position that is advantageous for the home user that wants that type of access.

Excellent, thank you. And another quick question will be, I know Brooks Rehabilitation has been a big fall of yours and they have a lot of your suits. They do a lot of work with it. What’s the status with them? Are they still pushing new suits out there you know working with it? And also, have you guys ever considered leasing some of the suits out to some of the training centers to get them in the door and to you know get more of a public market in mind on that?

I’m going to answer on the first part of your question on the leasing suits that has been an option we’ve offered at points in time and that may expand as we get more training centers going under CMS, because I think that would work. The first part of your question I wasn’t sure who you were referencing? I didn’t hear that clearly.

It was Brooks Rehabilitation, I believe they’re a big [inaudible]. Yeah, are they still doing it and are they expanding? Are they supporting it?

I haven’t worked with Brooks recently. They’ve been a great center. And I know some really good outcomes sent them out of there. I will ask my local rep as to what they’ve done in the last few weeks or months. But as far as I know, they’re still in great standing and are an outstanding center. I know a couple of the patients. In fact, one of them was here and helped us in our usability studies recently and they were well trained.

Thank you –

I’m sorry, I can’t be more [technical difficulty]

No, no, no, you did actually good. So the final question is the acquisitions. I know you had a lot of it. Are you guys looking at the acquisitions outside? I know you’ve got to be selective and obviously I know the competitive marketplace out there. It seems like there’s a couple of one, two, three the big players out there and a lot of the FDA has approved some new suits in the marketplace and you must in that. The acquisition, are you guys looking for something that’s similar to what the product is? Are you looking for something totally different I mean, to add to your product line?

We believe we’re the market leader with the Exoskeleton and the developments we have going around it for SCI, that will be stay ahead of our competition. So we’re not looking to acquire something that’s really that close in. But we are in the clinics for spinal cord injury patients, for stroke patients, for MS patients, and companies that have products that can help those populations, we have a good infrastructure to help them be more successful in selling, those are more the things we’re looking at. So we’re trying to stay in the neighborhood in the universe, which we understand and have talent in. But we believe we already have a market-leading technology and can keep advancing that if we can build the referral network and the market creation side of this through access. So, we’re not looking to add more Exoskeletons for SCI. But we certainly want to help other patients that in this clinic community that go home. I mean I can’t be more specific than that. But those are the types of things we’re looking for.

Well, congratulations, I think your company is in the best shape it’s been in in a long time. And I think you guys are going in the right direction. So keep up all the great work and thanks for helping all the patients out there.

Thank you. Thanks for the comments. Thank you.

And ladies and gentlemen, with that I’m showing no additional questions. I’d like to turn the floor back over to the management team for any closing remarks.

Jamie, thank you very much for the call, for everybody that joined us today. I appreciate it. And for anyone who listens to this, please feel free to come forward with us and ask questions. We as I’ve indicated, I laid out seven goals for this year. We’re going to report on those quarterly. So you can measure how we’re doing and the progress that we’re making. So I thank you for your time, and please reach out if you have other questions as we are going to expand our outreach to our investors going forward. Thank you.

And ladies and gentlemen, with that we’ll end today’s presentation. We thank you for joining. You may now disconnect your lines.