Ekso Bionics - Earnings Call - Q1 2025

Executive Summary

• Q1 2025 revenue fell to $3.38M, down 10% YoY and sequentially from a record Q4, primarily due to softer legacy EksoNR Enterprise Health device sales as IRF and IDN capital budgets tightened; gross margin held ~53.5% on supply chain/service cost savings.
• Revenue missed S&P Global consensus as limited Street coverage expected ~$4.62M; two-analyst EPS consensus was -1.65*, while reported GAAP EPS was -$0.12 (comparability caution given post-quarter reverse split) [functions.GetEstimates].
• Management accelerated the Personal Health channel: named NSM exclusive distributor in U.S. CRT (announced post year-end) and added Bionic P&O in O&P; Medicare beneficiary pipeline expanded to >35, up ~37% from early March, with PRIA guiding claim submissions.
• Operating cash burn improved materially (Q1 -$2.0M vs -$3.5M YoY) and cash rose to $8.1M; company later announced a 1-for-15 reverse split to regain Nasdaq minimum bid compliance, a near-term trading catalyst.

What Went Well and What Went Wrong

• What Went Well

  • Personal channel traction and distribution build-out: NSM (exclusive in CRT) and first O&P distributor Bionic P&O; CEO: “significantly expanded access to Ekso Indego Personal via potentially transformative partnerships”.
  • Medicare beneficiary pipeline scaling: >35 qualified candidates in pipeline in Q1, +37% vs ~25 discussed on the March call; PRIA engaged to improve claim quality and throughput.
  • Margin resilience and cost control: gross margin ~53.5% aided by supply chain/service cost savings; Ops expected margins to trend higher with volume mix normalization.

• What Went Wrong

  • Top-line softness: revenue declined to $3.38M on lower legacy EksoNR sales as IRF/IDN capital budgets were temporarily impacted by macro uncertainty; sequential deceleration from record Q4.
  • Enterprise demand timing: management flagged IDN off-cycle effects and sudden budget pullbacks, plus uncertainty around grant-funded capital purchases—pressuring near-term Enterprise placements.
  • Higher G&A from one-time items: Q1 G&A rose to $2.55M (vs $2.25M YoY) driven by intangible asset impairment and higher legal/audit costs (partly offset by lower discretionary payroll).

Transcript

Operator (participant)

Greetings and welcome to the Ekso Bionics First Quarter 2025 Financial Results Conference Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. If anyone should require operator assistance, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Stephen Kilmer of Investor Relations. Thank you. You may begin.

Stephen Kilmer (Representative from Investor Relations)

Thank you, Operator, and good afternoon, everyone. Earlier today, Ekso Bionics released financial results for the first quarter ended March 31, 2025. A copy of the press release is available on our website. I would like to point out that management will make statements during this call that include forward-looking statements within the meaning of the federal securities laws, which are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Any statements made during this call that are not statements of historical facts should be deemed to be forward-looking statements. All forward-looking statements, including statements regarding our business strategy, future financial performance or operational expectations, or our expectations of the regulatory landscape governing our products and operations, are based upon management's current estimates and various assumptions.

These statements involve material risks and uncertainties that could cause actual results or events to materially differ from those anticipated or implied by these forward-looking statements. Accordingly, you should not place undue reliance on these statements. For a list and description of the risks and uncertainties associated with the company's businesses, please see its filings with the Securities and Exchange Commission. Ekso disclaims any obligation, except as required by law, to update or revise any financial or operational projections, its regulatory outlook, or other forward-looking statements, whether because of new information, future events, or otherwise. Any forward-looking statements made on this call speak only as of the date of this call. Representing Ekso Bionics today are Scott Davis, our Chief Executive Officer, Jerome Wong, our Chief Financial Officer, and Jason Jones, our Chief Operating Officer. With that said, I'll now turn the call over to Jerome.

Jerome Wong (CFO)

Thank you, Steve. Good afternoon, everyone, and welcome to our First Quarter 2025 Conference Call. On behalf of the management team and everyone at Ekso Bionics, I would like to thank you for your interest in our company, and for those who are shareholders, we appreciate your support. For the benefit of those who are new to the Ekso Bionics story, I would like to take a moment to summarize our business. Ekso designs, develops, and markets exoskeleton products that augment human strength, endurance, and mobility. The primary end market for exoskeleton technology is healthcare, where our technology primarily serves people with physical disabilities or impairments in both physical rehabilitation and mobility. We operate as one operating and reportable segment with two markets: enterprise health and personal health.

Our legacy enterprise health products consist mainly of our EksoNR device, which is our wearable robotic exoskeleton specifically designed to be used in a rehabilitation setting to assist individuals recovering from both acute and chronic conditions, and our Ekso Indego Personal device, a wearable lower extremity powered exoskeleton that enables certain individuals living with spinal cord injuries the ability to stand and walk independently. Both products also include support and maintenance contracts. I will turn the call over to Scott in a moment for an update on our commercial activities and growth plans. However, before I do, I would like to provide a brief summary of our financial results. To streamline things, all the numbers I refer to have been rounded, so they are approximate. The company recorded revenue of $3.4 million in the first quarter of 2025, compared to $3.8 million for the same period in 2024.

This reduction was due to capital budget impact from certain Inpatient Rehabilitation Facilities, or IRFs, related to our EksoNR enterprise health product. Gross profit for the first quarter was $1.8 million, representing a gross margin of approximately 54% compared to a gross profit of $2 million and a gross margin of 52% for the same period of 2024. The change in gross profit was driven by a decrease in revenues from enterprise health devices, partially offset by cost savings in supply chain and a reduction in service costs. The increase in gross margin was primarily due to cost savings in supply chain and a reduction in service costs, partially offset by lower margin sales related to increased volume through distribution.

Operating expenses for the first quarter of 2025, which consists of R&D, G&A, and sales and marketing expenses, were $5.3 million, essentially unchanged from $5.2 million for the first quarter of 2024. Net loss applicable to common stockholders for the 2025 first quarter was $2.9 million, or $0.12 per basic and diluted share, compared to a net loss of $3.4 million, or $0.20 per basic and diluted share for the same period of 2024. For the fourth quarter of 2025, the company used $2 million of net cash in operations, compared to $3.5 million for the same period in 2025. As of March 31, 2025, the company had cash and restricted cash of $8.1 million, up from $6.5 million as of the end of 2024. That's it for my summary of our first quarter 2025 results. Please see our Form 10-Q filed earlier today for further details regarding the results.

I'll now turn the call over to Scott.

Scott Davis (CEO)

Thank you, Jerome. While we saw some softness in our legacy enterprise business in Q1, as we had several customers whose capital budgets were at least temporarily impacted by reactions to macroeconomic uncertainties, that was partially offset by good growth from our Ekso Indego Personal. As we have discussed in the past, CMS established pricing determination for our Indego Personal exoskeleton in Q2 of 2024. This regulatory change created a significant opportunity to help Medicare enrollees living with a spinal cord injury by removing what had historically been a primary barrier to accessing our exoskeleton. Accordingly, we immediately set out to establish a go-to-market strategy aimed at notifying as many early physician and provider adopters as possible of the new CMS benefit category redetermination and the fee schedule listing.

Additionally, we began working closely with our extensive network of neurorehabilitation partners across the country, focused on education efforts and on appropriate patient selection and process for patients prescribed an Ekso Indego Personal for the home and community setting. With that early work largely completed, we then shifted our primary focus from building awareness and providing customer education to advancing our scalable go-to-market strategy for the personal channel. As we discussed on our Q4 call just a few weeks ago, one of the key changes we made was to engage PRIA Healthcare, one of the leaders in market access services, which has been instrumental in the successful commercialization of over 300 medical devices. As a quick status update, we also recently announced bringing on Bionic P&O as a new and our first O&P distributor.

We're excited to report that they already submitted their first patient claim for the Indego Personal exoskeleton to Medicare in Q1. With Ekso's focused marketing efforts, we've now developed a pipeline of more than 35 Medicare beneficiaries that we believe are qualified candidates for Ekso Indego Personal in 2025. That's up 37% from where we were on our Q4 call in early March. Factors considered for the candidates to be represented in our pipeline include, among other things, Medicare enrollment, an appropriate indication for use, and medical necessity. Moving forward, we believe working with our growing distribution network and leveraging our new relationship with PRIA throughout the claims process places qualified candidates in a good position of having their claims successfully processed.

That said, and as we cautioned on our last call, we obviously cannot guarantee that all of our pipeline will result in new claims submissions occur within this timeframe or ultimately be paid. Nevertheless, we believe that we can leverage our experience over the past year and the capabilities and reach of our new partners to navigate the complexities of coding, coverage, and payment, which will allow us to more effectively put Ekso Indego Personal within reach of the individuals who need this potentially life-changing mobility-enhancing technology. In summary, with a strong focus on business development activities, Ekso is building what we believe is a more scalable go-to-market strategy for our Ekso Indego Personal. This is exemplified by our most recent separate but clearly related moves, where we named National Seating & Mobility as the company's exclusive distributor of the device within the U.S. Complex Rehabilitation Technology, or CRT, industry.

As I mentioned a moment ago, our most recent engagement with Bionic P&O as a non-exclusive distributor of Ekso Indego Personal within the orthotics and prosthetics industry. We believe that NSM and Bionic P&O up will significantly broaden access to our portable exoskeleton device for individuals living with spinal cord injuries and, longer-term, perhaps other mobility challenges across the United States. NSM brings a network of over 180 locations and more than 2,400 team members who support more than 250,000 mobility solutions each year. Bionic P&O, a leading national provider of prosthetic and orthotic solutions, is an ABC-accredited independent clinical practice group that now operates across 12 states. While the majority of our revenue in 2025 will still come from enterprise health, we believe with our significant investment in these scalable programs, we will continue to see rapidly increasing contribution from our personal health products throughout 2025.

In summary, the first quarter was another period of significant progress for Ekso Bionics, marked by a growing shift between legacy enterprise and newer personal revenue contributions. Good gross margins, lower cash burn, a stronger balance sheet, a growing pipeline of Medicare beneficiaries, and what we believe are excellent candidates for Indego Personal in 2025, and the continued building of a scalable go-to-market strategy for Indego Personal, supported by both established and new industry-leading DME, O&P, and market access partners. This ends our prepared remarks for today. With that, we're happy to take any questions that you might have. Operator?

Operator (participant)

Thank you. We'll now be conducting a question-and-answer session. If you'd like to ask a question, please press Star 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press Star 2 to remove yourself from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment, please, while we pull for questions. Our first question here is from Ben Haynor from Lake Street Capital Markets. Please go ahead.

Ben Haynor (Managing Director)

Good afternoon, gentlemen. Thanks for taking the questions. First off, for me, now that you've got the O&P channel covered with Bionics, or at least initially covered, and you have the complex rehabilitation therapy channel, the traditional kind of Medicare DME, along with the kind of post-acute rehab clinics on the more enterprise side, how should investors kind of think about where the patients will fall this year in terms of the Indego Personal and kind of as a kind of a third, a third, a third with CRT, O&P, and the traditional channel? What do you expect from your enterprise folks?

Scott Davis (CEO)

Okay. Yeah, great question, Ben. Thank you. Again, the majority of our business historically has come out of our enterprise health product portfolio. In general, as we move through 2025, we still expect that enterprise product will represent the large majority of what we do, 75%-80% of our business represented by that product category. Moving into the personal product, again, as we have worked to develop our initial channels into that segment, and we've really scaled up our market access capabilities, and we've driven a good pipeline, we do expect a solid contribution, growing quarter over quarter as we move through the year with really the balance of our business represented from that segment. As far as how that falls between CRT and O&P space, I think there's a bit more of a familiarity in the O&P space.

The product sort of lends itself a little bit more to reimbursement through O&P providers. However, there's been a big investment with NSM in the space, so we do expect that as the year progresses, we'll see a good contribution from there as well. How that actually falls as we move through the year, we're uncertain of. It could be as much as 50/50. It could be a little less. We just won't know until that program really starts to ramp up on the CRT side.

Ben Haynor (Managing Director)

Okay. That's fair enough. With PRIA, I guess, any more color on how things are going there? Are you getting a sense of what's kind of a no-go submission if you don't have certain documentation or things of that nature that you need or don't need and kind of coming up with the knowledge that you need to have more successful claims down the road?

Scott Davis (CEO)

Yeah. We had learned from the claims that we've submitted, past claims. We've had a claim that ended up in ALJ, which gave us a very clear indication of perhaps what they were looking for. We believe that what we've put together right now as far as the requirements for what we consider to be a solid claim or successful claim, we believe we have a strong understanding of that. That being said, there has not been a definitive set of criteria that have been sort of published through CMS or through the DME Max, which indicate what is their definition of exactly what's required in those claims. However, based on what we've seen, our interactions, and what we learned through our engagement with PRIA, we feel like the claims that are being submitted today are very comprehensive and have a high probability of going through.

Ben Haynor (Managing Director)

Okay. Got it. That's encouraging. On kind of the IDN front, it sounds like there's still some budget constraints. Obviously, there's a lot of uncertainty out there, just generally speaking. Do you have a sense of what these folks are looking at on the capital budgeting side later this year, or how much of a read-through do you have on that sort of part of the business?

Scott Davis (CEO)

Yeah. I mean, as I had talked about in previous quarters, we had talked about 2024 being an off-cycle year for IDNs. We do have a lot of renewals coming up with IDNs in 2025. Those appear to be on track at the moment. We expect in North America that to be a solid contribution to our enterprise health business in 2024. We also have a lot of inpatient rehab facilities that maybe are not part of larger health networks, independent hospitals that have capital budgets where we have been working with them, some of them for years, others for months. Those capital budgets, we have seen a little bit of a softness, certainly in Q1, around that, around economic uncertainties. We have seen those capital budgets, which were there, disappear rather suddenly. We also have many of our capital customers who receive federal grants for some of this technology.

The status of those grants is uncertain at the moment as well. While we have a strong pipeline on the enterprise business, we are seeing budgets impacted at least temporarily around some of those purchases. It certainly affected us in Q1. It is something that we are preparing ourselves as we move through 2025 that this could be a bit of a longer-term impact. To date, we do not have anything definitive that it will be.

Ben Haynor (Managing Director)

Okay. Got it. Lastly, for me, on the gross margin, it's been four consecutive quarters. They've been north of 53%. It looks like you're clearly trending in the right direction there. I mean, is this kind of a new sort of baseline and now as revenues expand from here, you can move gross margin higher with that?

Scott Davis (CEO)

We believe so. Jason and the operations team have done just an amazing job as it relates to keeping our costs down, raw material costs, bill of material costs on the product. The impact, we frankly expected margins to be a bit higher in Q1. It was really just driven by a lower volume of products that we put out that had an impact to those margins. Some of it was mixed too. We had, again, a fair contribution from Europe as well.

Ben Haynor (Managing Director)

Got it. Excellent. Thanks for taking the questions, guys.

Scott Davis (CEO)

Appreciate it, Ben. Thank you.

Operator (participant)

Next question here is from Swayampakula Ramakanth from H.C. Wainwright. Please go ahead.

Swayampakula Ramakanth (Managing Director)

Thank you. Good afternoon, Scott and Jerome.

Scott Davis (CEO)

RK, how are you?

Swayampakula Ramakanth (Managing Director)

Good. Good. I just was trying to expand a little bit on the two relationships that you built over the last quarter or so. That's the NSM and the P&O, I mean, Bionic P&O.

Scott Davis (CEO)

Yes.

Swayampakula Ramakanth (Managing Director)

When I take a quick look at where their locations are, obviously, Bionic P&O is a smaller set compared to national NSM. What I'm trying to understand is, will their clientele, them being in certain areas, similar areas in certain geographies, will that be an issue for you or actually that will actually enhance your product in these geographies?

Scott Davis (CEO)

Yeah. We believe that these partnerships actually enhance our value because of the strength of these organizations. They have existing relationships with processing large numbers of claims through the DME Max. They are experts, certainly National Seating &Mobility is an expert on the mobility side of things with powered wheelchairs and high-tech mobility products. They understand how to work with the patient, with the payers, with the physicians around that. When we look at Bionic P&O, they are used to dealing with complex orthotics. They, again, can really help coordinate that experience for that patient in helping them gain what they need from their physician as well as other healthcare providers and work with the payer to ensure that they have a solid claim. They are both geared toward that. For National Seating & Mobility, they are quite a large organization.

Maintaining the right certifications and taxonomy on a state-by-state basis is something that they're working on and building out. As they build out their coverage, they do have full national coverage. As they build that out, the reach will expand with them. Bionic P&O is currently in 12 states. As it turns out, we have a lot of the folks that we have that are within our growing pipeline of potential beneficiaries. We have a lot of crossover in their states. We're also continuing to develop the program so that we have good coverage across all 50 states to ensure that individuals who qualify for this technology have a convenient location and a convenient partner to work with. We do believe that their expertise absolutely helps and can facilitate cleaner and better submissions.

Swayampakula Ramakanth (Managing Director)

Okay. Having these relationships, I'm just trying to understand how much of a help does it give you in terms of your G&A expenses? Because you don't have to have that many feet on the ground, so to speak. At the same time, how much of that gets neutralized by the amount of pay-away that you'll need to do to these two groups?

Scott Davis (CEO)

Sure. As we looked at the, now, is this something that we do ourselves? Do we build this capability in-house, or do we leverage experts who are out there? We made the decision to leverage experts in this space. That does save us considerably. When you're talking about market access and B2C business, it would require a significant investment in-house for Ekso to be able to hire the number of people that we would need to be able to process all of these claims, to be able to be a local point of presence as these fitments and screenings are happening. It would be incredibly challenging for us to do that. By setting up a distribution network, this allows us to leverage these much larger organizations that have wider teams with regional and national coverage.

Of course, that is at the trade-off of now we have a two-tier model. We need to be able to support the margins for our distributors. Through the good work that Jason and his team have been doing in ensuring that we maintain good cost controls on our devices and continually improve our operating efficiency, both inside as well as through outside contract manufacturers, we are, as the volume increases, expecting to be able to maintain adequate margins to be able to support this distribution network and still maintain margins that are within what people are used to seeing from us in those high 50s plus.

Swayampakula Ramakanth (Managing Director)

Thank you. Thank you, Scott, for taking my questions.

Scott Davis (CEO)

Thanks, RK.

Operator (participant)

This concludes the question-and-answer session. I'd like to turn the floor back to management for any closing comments.

Scott Davis (CEO)

Thank you, Matt. Thank you to everyone for joining us today. We look forward to updating you as we continue to progress.

Operator (participant)

This concludes today's teleconference. You may disconnect your lines at this time. Thank you again for your participation.