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LL

Lifeward Ltd. (LFWD)·Q1 2025 Earnings Summary

Executive Summary

  • Q1 2025 revenue was $5.03M, down 4.7% YoY due to prior-year Medicare catch-up, while GAAP gross margin expanded sharply to 42.2% from 26.4% YoY; non-GAAP gross margin also 42.2% .
  • Lifeward missed Wall Street consensus in Q1: revenue $5.03M vs $5.84M*, EPS -$0.44 vs -$0.36*; Q4 2024 revenue was slightly below consensus but EPS beat (-$0.38 vs -$0.51*) .
  • FY 2025 revenue guidance reaffirmed at $28–$30M; management reiterated the goal of ~-$1M adjusted operating loss in Q4 2025, supported by AlterG momentum and a growing ReWalk pipeline .
  • Execution catalysts: ReWalk 7 FDA clearance (March), first major U.S. commercial payer approval (April), Medicare MACs converging on uniform criteria, and AlterG growth with NEO line despite transitional manufacturing costs .

What Went Well and What Went Wrong

What Went Well

  • Gross margin expansion: GAAP gross margin 42.2% vs 26.4% YoY; non-GAAP 42.2% vs 33.7% YoY, driven by favorable ReWalk payor mix and AlterG volume leverage .
  • AlterG product momentum: AlterG revenue grew 17% YoY to $3.3M; management noted strong international demand and backlog health .
  • Commercial coverage traction: first approval by a major U.S. insurer for ReWalk 7 post-FDA clearance—“marks the first approval for payment of the all-new ReWalk 7 Personal Exoskeleton” .
  • Management quote: “Key measurements…over 120 qualified ReWalk leads…record number of 36 ReWalk rentals…AlterG has grown by 19% and 17% in the last 2 quarters…give us confidence in the growth…” .

What Went Wrong

  • Top-line below consensus: Q1 revenue missed estimates ($5.03M vs $5.84M*), burdened by prior-year Medicare timing effects and ReWalk volume/mix .
  • Transitional costs and mix pressure: margins “below our expectations” due to ReWalk volume/mix and AlterG transitional costs to the contract manufacturer .
  • Working capital and receivables clean-up: G&A included ~$300K bad-debt expense tied to early Medicare claims unlikely to meet clarified criteria .
  • Supply constraints: AlterG demand exceeded supply amid transition to contract manufacturing, temporarily limiting Q1 unit availability .

Financial Results

Summary Performance vs Prior Periods and Estimates

MetricQ3 2024Q4 2024Q1 2025
Revenue ($USD Millions)$6.13 $7.55 $5.03
GAAP Gross Margin %36.2% 24.4% 42.2%
Non-GAAP Gross Margin %42.5% 45.4% 42.2%
GAAP Operating Expenses ($M)$5.39 $17.07 $6.98
Non-GAAP Operating Expenses ($M)$6.70 $6.70 $6.80
GAAP Operating Loss ($M)$(3.17) $(15.23) $(4.85)
Non-GAAP Operating Loss ($M)$(4.05) $(3.28) $(4.63)
GAAP Net Loss ($M)$(3.08) $(15.28) $(4.83)
GAAP EPS ($)$(0.35) $(1.73) $(0.46)
Non-GAAP EPS ($)$(0.45) $(0.38) $(0.44)

Actuals vs Consensus

MetricQ3 2024Q4 2024Q1 2025
Revenue Actual ($M)$6.13 $7.55 $5.03
Revenue Consensus ($M)$8.44*$7.84*$5.84*
Revenue ResultMissMissMiss
EPS Actual ($)$(0.35) $(0.38) $(0.44)
EPS Consensus ($)$(0.32)*$(0.51)*$(0.36)*
EPS ResultMissBeatMiss

Estimates marked with * retrieved from S&P Global.

Segment Mix (Q1 2025)

SegmentQ1 2025 Revenue ($M)YoY ChangeCommentary
ReWalk Exoskeletons, MyoCycles, ReStore Exo-Suits$1.70 Down $0.8M YoYPrior-year included ~$0.5M Medicare shipments recognized when pricing established
AlterG Products & Services$3.30 Up $0.5M (+17%) YoYDriven primarily by international demand

Note: On the call, management cited $1.6M (ReWalk/MyoCycle/ReStore) and $3.4M (AlterG), reflecting minor rounding/timing differences vs press release .

KPIs and Pipeline

KPIQ3 2024Q4 2024Q1 2025
U.S. Qualified ReWalk Leads~70 >110 >120 (CFO noted >125)
Active ReWalk Rentals25 27 (24 DE, 3 US VA) 36 (primarily Germany)
AlterG Backlog (Systems)74 25 27
ReWalk Units Placed (Medicare)——>10 in quarter

Liquidity

  • Cash and equivalents $5.73M at 3/31/25; no debt; post quarter raised $0.5M via ATM .

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
RevenueFY 2025$28–$30M (3/7/25) $28–$30M (reaffirmed 5/15/25) Maintained
Adjusted Gross MarginFY 202547%–49% (3/7/25) Not updated in Q1 press/callMaintained (implicit)
Non-GAAP Operating ExpensesFY 2025$22–$23M (3/7/25) Not updated in Q1 press/callMaintained (implicit)
Non-GAAP Operating LossFY 2025$(7)–$(9)M (3/7/25) Not updated in Q1 press/callMaintained (implicit)
Adjusted Operating LossQ4 2025≈$(1)M target (3/7/25) Reiterated ≈$(1)M (5/15/25) Maintained

Earnings Call Themes & Trends

TopicPrevious Mentions (Q3’24 and Q4’24)Current Period (Q1’25)Trend
Medicare MACs process predictabilityLong cycle (~150 days), back-and-forth documentation; working to streamline MACs converging on uniform criteria and claims data; expect shorter cycle times Improving operational clarity
Workers’ compensation channelStrategy to expand; CorLife exclusive distribution announced (Q4) CorLife seen as more efficient; workers’ comp ~6–7% of SCI market Building new payer lane
Commercial insurance coverageFocused case-by-case submissions (Q4) First major commercial payer approval for ReWalk 7; more cases in process Positive traction
AlterG operations & demandNEO launch; integration; backlog swings (74→25); target 20% Q1 growth vs Q1’24 17% YoY revenue growth; temporary supply constraints amidst contract manufacturing transition Demand healthy; supply normalizing
Product roadmap (ReWalk 7)FDA submission; anticipated clearance in early 2025 FDA-cleared; launch in April; smartwatch integration, improved usability, battery upgrades Executed launch
Tariffs/macroCapital equipment softness; integration effects (AlterG) Monitoring tariffs; minimal direct impact; geography concentration US/Germany/Europe Neutral to slightly cautious

Management Commentary

  • “We are laser focused on…profitable revenue growth, tight expense control, and cash management…Key measurements…over 120 qualified ReWalk leads…36 ReWalk rentals…AlterG has grown by 19% and 17%…” — CEO Larry Jasinski .
  • “GAAP gross margin was 42.2%…below our expectations primarily due to volume and mix of ReWalk…combined with lower margins for AlterG products due to transitional costs for the move…to a contract manufacturer.” — CFO Mike Lawless .
  • “Based on the results of Q1, I reaffirm our guidance of sales between $28–$30M for 2025…anticipation…Q4 adjusted operating loss of approximately $1M.” — CEO Larry Jasinski .
  • “MACs have agreed on a uniform set of claims data and approval criteria…enable faster and more consistent claims decisions…more timely payment.” — CEO Larry Jasinski .

Q&A Highlights

  • Tariffs/macro: Company monitoring; limited current impact given production in Israel and revenue concentration in US/Germany; little Asia exposure .
  • Guidance confidence and Q4 loss path: Breakeven requires ~$10M quarterly run rate; expect seasonality plus pipeline/backlog and expense reductions to narrow losses to ~-$1M in Q4 .
  • ReWalk 7 feature set: Enhanced software usability, crutch control, higher power, off-the-shelf larger batteries, smartwatch app integration; price point unchanged (CMS set) .
  • MYOLYN expansion: Home-use referral sales broaden addressable market; synergy with ReWalk leads; expected ramp in 2H 2025 .
  • BARMER contract: Detailed provisions for training, sustainability (storage/refurb), replenishment; template for broader German insurer adoption .
  • Bad-debt reserve: ~$300K due to clarified Medicare criteria affecting early claims; intent to pursue remaining AR .

Estimates Context

  • Q1 2025: Revenue $5.03M vs $5.84M* (Miss); EPS -$0.44 vs -$0.36* (Miss). Drivers: ReWalk volume/mix and transitional AlterG costs; prior-year Medicare timing impacted YoY optics .
  • Q4 2024: Revenue $7.55M vs $7.84M* (Miss); EPS -$0.38 vs -$0.51* (Beat), reflecting cost actions and mix .
  • Q3 2024: Revenue $6.13M vs $8.44M* (Miss); EPS -$0.35 actual vs -$0.32* (Miss), with AlterG demand softness in U.S. and Medicare processing cycles .

Estimates marked with * retrieved from S&P Global.

Key Takeaways for Investors

  • Near-term: Expect sequential revenue growth post seasonally weak Q1; watch MAC process normalization and ReWalk conversion rates as catalysts for estimate revisions and stock reaction .
  • Margin trajectory: Gross margin uplift should persist as mix improves and manufacturing transition costs fade; monitor AlterG supply normalization .
  • Payer diversification: Workers’ comp (CorLife) and first commercial payer approval de-risk dependence on Medicare; increases speed-to-cash and potentially improves unit economics .
  • Pipeline health: >120 qualified U.S. ReWalk leads and record rentals are leading indicators; sustained growth depends on converting this pipeline .
  • Liquidity: $5.7M cash and $0.5M ATM post-quarter; watch operating cash burn and AR collections as MAC criteria standardize .
  • Guidance: Reaffirmed $28–$30M revenue; path to ~-$1M Q4 adjusted operating loss hinges on execution in ReWalk and AlterG; upside from commercial insurance penetration .
  • Actionable: Position around reimbursement/process milestones (MAC standardization), AlterG manufacturing transition progress, and incremental commercial payer wins as potential positive surprise drivers .