ReWalk Robotics Ltd.
Q2 2021 Earnings Call Transcript

Published: 9 Aug 2021

[Operator:]

Good day, and thank you for standing by. Welcome to the Q2 2021 ReWalk Robotics Limited Earnings Conference Call. I would now like to turn the conference over to your host to Mr. Ori Gon. Please go ahead, sir.

[Ori Gon:]

Thank you, Patricia. Good morning, and welcome to ReWalk Robotics second quarter 2021 EARNINGS Call. This is Ori Gon, ReWalk's Chief Financial Officer, and with me on today's call is Larry Jasinski, our Chief Executive Officer. This morning, the company issued a press release detailing financial results for the 3 and 6 months ended June 30, 2021. This press release and a webcast of this call can be accessed through the Investor Relations section of the ReWalk website at www.rewalk.com. Before we get started, I would 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's management as of today and involve risks and uncertainties, including those noted in this morning's 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 telephone replay of the call will be available shortly after completion of this call. You will find the dial-in information in today's press release. The archived webcast will be available on 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 August 09, 2021. Since then, ReWalk may have made announcements related to the topics discussed, so please reference the company's most recent press releases and SEC filings. And with that, I'll turn the call over to ReWalk's CEO, Larry Jasinski. Larry?

[Larry Jasinski:]

Thank you, Ori. Good morning, everyone. ReWalk had a very good Q2 and met our key objectives. We see the right trends to grow our business and are optimistic about the direction for the year. We have seen the majority of our accounts returning to normal levels of activity. As a measurable example, after 15 months without being able to schedule a single user training or trial in the VA, we now have 10 in the process of being scheduled in Q3 and Q4. We have a database of 45 potential VA candidates that we will work with in the second half of 2021 and 2022. Q2 sales were $1.436 million, which represents our fourth consecutive quarter of growth and recovery from the pandemic. The patient trainings and present account activity supports continuing growth in the second half of 2022. Our sales mix resulted in a Q2 gross margin of 50.6% and is at 52.1% year-to-date. Our expenses increased by $140,000 to $3.868 million as we increase activity with the market reopening. We started the year identifying the key milestones that will drive our growth and long-term success. We are pleased with the progress occurring with each and they remain the most important measurements to meeting our goals of providing broad access to our products via coverage policies and expanding the supporting base for their use. The four we outlined were

[Ori Gon:]

Thanks, Larry. ReWalk booked a total of $1.4 million in revenue in the second quarter of 2021, compared to $1.7 million in the second quarter of 2020. The decrease was mainly due to lower number of Personal 6.0 units sold in Europe this quarter. For the 6 months period ended June 30, 2021, we have recorded a total of $2.8 million in revenues, compared to $2.4 million in the previous year, which represents 13% year-over-year growth. This increase is mainly due to higher revenues in the U.S from Personal 6.0, Myolyn and ReStore sales. This quarter for example, we had sold 9 Myolyn units for over $100,000, which marked our highest quarter to date for this product line. As we look at our insurance progress, during this quarter, we had a total of eight new insurance decisions to place a device for a new rental or direct purchase and five conversions of previously rented devices. Our current pipeline of active rentals consist of 17 cases representing a total of $1.7 million, and our overall insurance cases is currently at 86, which 73 in Germany and 13 in the U.S. Turning into our gross margin. In the second quarter of 2021, our gross margin was 51% compared to 61% in the prior year quarter. The decrease is mainly due to the changes in our sales mix, and the reduced revenue as well as the higher costs related to service. Regarding our operating expenses, our second quarter 2021 OpEx was $3.9 million compared to $3.6 million in the prior year quarter. This increase is mainly due to higher sales and marketing expenses that we are now back in the field, and we also had cost reduction elements in the prior year quarter. The lower R&D that offset this increase during this quarter is mainly due to lower employee and employee related expenses. To recap the quarterly results, our net loss for the second quarter of 2021 was $3.1 million compared to a net loss of $2.8 million in the second quarter of 2020. Our non-GAAP net loss for the second quarter of 2021 was $2.9 million compared to $2.7 million in the second quarter of 2020. We ended the quarter with $64.2 million in cash. With that, I'd like to turn the call back to Larry for some final remarks. Larry?

[Larry Jasinski:]

Thank you, Ori. I'd like to continue the session with a focus on the second half of 2021. We have several major milestones and business activities which drive the second half results and that will support growth for 2022 and beyond. There are several highly visible efforts and other activities that are meaningful as they build our business position. The highly visible ones are the German court case, progress with CMS and national account efforts . Very importantly, there are also several less visible nuts and bolts activities, which include

[Operator:]

Your first question comes from the line of Swayampakula Ramakanth from H.C. Wainwright. Your line is open.

[Swayampakula Ramakanth:]

Thank you. Good morning, Larry and Ori. So I think -- in terms of thinking about the German court process, as you stated, if the German courts are successful in completing their process and also publishing their findings by mid-October, would you think '20 the revenue growth from it would be meaningful in '21? Or is it more of a '22 event?

[Larry Jasinski:]

I think, first, the timing in which they actually issue it is not in our control. We anticipate based on past history that it will be mid-October. It could be a little bit later, it could be a little bit sooner, but just want to clarify that. There would probably be some immediate impact as we have a significant number of social court cases. So that may allow a few to convert, but the majority of the value to this will be in -- probably in '22. So because we get in October, we'd have to convert those patients with the holidays by early December. So the timing may affect that a little bit. So there is some potential in '21 a lot of potential in '22.

[Swayampakula Ramakanth:]

Okay, perfect. And then it is actually very encouraging to seeing the additional five BKK partners joining the contract even as the court case are progressing, probably, it's a good sign. But what is the process for them? As they're signing on, do you see an increase in the backlog, so you can kind of get an idea as to how many units you will need to keep ready, when things all come to fruition?

[Larry Jasinski:]

The BKK additions are encouraging to see. As I said, we didn't anticipate them, but what they will do is bringing in some additional patients that will go into the system and process in about the 6 month cycle, which is common by the time we trial on to get them fully trained and then get a product to them. So their impact will be late this year, early next for those. The number of patients in those specific five, I cannot identify for you right now. Ori, might have that number, but I do not in front of me.

[Ori Gon:]

Yes. Yes, I have the number. So currently we have a total of six cases within the BKK different groups.

[Swayampakula Ramakanth:]

Thank you. And the last question from me, before I get back into the line. So on the trial evaluations in international chains and also through NHS, so what's the process there and how is that progressing from trial to revenue generation?

[Larry Jasinski:]

Well, the process there with -- is similar between NHS and national chains. It was a early -- we went two committees within each groups and demonstrated the product, provided the data and each elected to move into a trial evaluation as a baseline for deciding whether or not to put it in a larger number of accounts. That all occurred quite some time ago with COVID. Simply, we weren't doing much with it for quite some time. And as the centers have reopened, what we’ve done is moved to the stage of these actual evaluations that were booked 9 months or so ago. And what we've done is completed the training, and they are now using the product in the selected centers by the chains and by NHS. And so we're kind of in the middle of that process right now. Our expectation is that the results are consistent with what we’ve had at other places that have used the product, that it will move to a contracting phase and more sites. But that is really a determination by how they feel it fits their specific clinical situation at the NHS and at each of the U.S chains. So the timing for that, I think we're still not going that quickly with the number of patients coming in with COVID still is been slower in the U.K., it's been better in the U.S. But we don't have a specific timeline as to when we would try to switch from a valuation to a contract. I would hope it would be before year-end. Will it impact this year sales? Significantly, maybe a few units, but not a large number. So sorry, it's a long answer because we're not entirely sure of the exact timing.

[Swayampakula Ramakanth:]

Thank you. Thanks for taking all my questions.

[Ori Gon:]

Thanks.

[Operator:]

I am showing no further questions at this time. I would like to turn it back to Mr. Larry Jasinski for further comments.

[Larry Jasinski:]

Thank you, Patricia. As I close the call, I made the statement I very much look forward to reporting this in the coming quarters. And it's really based on the trends that we see this quarter. If these continue, these will be some enjoyable calls for us with progress in the coming months. So please stay tuned to our publications, and everybody have a wonderful day. Thank you.

[Operator:]

And this concludes today's conference calls. Thank you all for joining. You may now disconnect.

[Larry Jasinski:]

Thank you, Patricia.

[Ori Gon:]

Thanks.