Welcome to the Second Quarter 2022 ReWalk Robotics Ltd. Earnings Conference Call. My name is Richard and I will be your operator for today’s call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session. I will now turn the call over to Almog Adar. You may begin.

Thank you, Richard. Good morning, and welcome to ReWalk Robotics' second quarter 2022 earnings call. This is Almog Adar, ReWalk's Director of Finance and with me on today's call is Larry Jasinski, Chief Executive Officer. Today, the company issued a press release detailing financial results for the three and six months ended June 30, 2022. This press release and the 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 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. Our earnings press release and this call will include discussion of certain non-GAAP information. You can find our earnings press release including relevant non-GAAP reconciliations on our corporate website at rewalk.com. 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, www.rewalk.com. For the benefit of those who may be listening to the replay or the archived webcast, this call was held and recorded on August 9, 2022. 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 will turn the call over to ReWalk's CEO, Larry Jasinski.

Thanks, Almog. Good morning. Thank you for joining us today. As you will see from our results, we made important progress in the quarter on our key objective of establishing a growing and sustainable market with broad community coverage. Our original mission of improving the health and wellbeing of the paralyzed community through enabling an individual to regain ambulation as a part of their daily life is in our sights. Our experiences and data on the impact on their physical health, their quality of life, and involvement in the community is now extensive and remains compelling. To start, I'd like to walk through the status on the three focused areas I identified at the start of the year. As a reminder, these areas are: first, progress with CMS and the status of the German court case; second, executing on technical developments to improve our ReWalk Personal System; third, continuing to develop processing infrastructure and support materials for training, service, reimbursement assistance, and sales coverage to grow effectively. Starting with CMS, we were placed on the biannual Healthcare Common Procedure Coding System public meeting agenda, known as HCPCS to present the basis for a Medicare benefit category determination for the ReWalk Personal Prosthetic Exoskeleton System. On June the 8th, we presented before CMS at its HCPCS meeting, detailing why CMS should properly assign the ReWalk Personal Prosthetic Exoskeleton to the artificial leg prosthetic benefit category, because this is a medically proven and necessary technology. We stressed three points in this discussion. One, ReWalk meets Medicare's statutory definition of a prosthetic device. Medicare considers artificial legs, arms, and eyes to be covered under the prosthetic device benefit category as well as devices that “place all or part of the function of a permanently inoperative or malfunctioning internal body organ.” Two, ReWalk satisfies Medicare's definition of a prosthetic device. ReWalk is a device as defined by the FDA in the de novo clearance. And third, ReWalk acts as a pair of artificial legs for individuals who are permanently paralyzed or otherwise disabled due to spinal cord injury. It enables functional ambulation of the lower legs where such ambulation would otherwise be impossible due to the injury of an internal body organ, the spinal cord. There are also multiple clinical and industry speakers supporting ReWalk’s benefit category assignment, which was highly encouraging. In addition, following the meeting, we provided a detailed submission to the agency. CMS is now considering their request and we anticipate guidance on this recommendation in late Q3 or in Q4. In parallel, we were advised to submit our first claims for CMS beneficiaries from the pool of patients that have been waiting for many years to regain ambulation. The initial claims are planned in the coming months and this activity will help advance this process. Now a brief update on Germany, the pending case with the German Federal Social Court has not yet been ruled on by the court. Although timing of any ruling is up to the court, we are one of the oldest cases currently on their agenda. The second category regarding the technical developments on the ReWalk Personal Exoskeleton System, we have submitted a 510(k) application in June 2022 to enable stair and curb navigation with our ReWalk Exoskeleton. These additional capabilities will significantly improve users' access to more locations and environments and it will make the ReWalk Exoskeleton the first of its kind to receive FDA clearance for stair and curb functionality for personal use. This application previously received a breakthrough device designation with the FDA and is currently pending FDA clearance, which is anticipated later this year. In addition, we're developing multiple improvements to the ReWalk system with a seventh-generation design that is intended to improve usability, add new features, and expand capabilities for monitoring utilization data. We believe these improvements continue to provide a significant advantage with the ReWalk as the most functional design in the marketplace. In parallel, we are continuing to advance the ReBoot Soft Exosuit program for post-stroke home and community use. The team at Harvard has continued to evaluate the device for home use and has recently completed a study which forced us to provide it to participants for home and community use in the Boston area to examine functionality and utilization. The study was supportive of advancing the program to the next stage of development. We're now moving to a commercial design plan and a review of the related business plan. As the first of its kind system providing powered propulsion during walking in the home and community, this design also received a breakthrough device designation with the FDA. As a home use device, coverage and reimbursement are a key element in advancing this innovative concept to commercial use. With a breakthrough device designation, we are closely monitoring progress of the TCET, Transitional Coverage of Emerging Technologies program, which could provide Medicare coverage guidance for breakthrough devices like the ReBoot. This is still an active consideration, and the comment period was recently delayed from October 2022 until April 2023. A final decision and its outcome will affect the pathway for many breakthrough technologies like the ReBoot. The third category, processing infrastructure and support. An important element in the processing of claims with Medicare and others is the provision of data in a structure that meets the requirements for every insurer. As part of this, ReWalk has completed a comprehensive dossier that documents the extensive clinical evidence, which supports the ReWalk Personal Prosthetic Exoskeleton that has crossed the threshold to prove the prescription of the system is reasonable and necessary, and therefore satisfies the requirement for medical necessity. This dossier includes information on the disease burden via its clinical and empirical evidence, a summary of economic value modeling, and expert opinions including societal support. The conclusion in the summary states, 'the ReWalk Exoskeleton enables trained patients with SCI to perform core weight bearing and functional ambulation tasks such as standing and walking within home and community settings. Ambulation is beneficial in and of itself, but also produces physical and mental benefits that counter the long-term consequences of SCI.' This exhaustive document will support efforts with insurers going forward. We have it structured to be able to modify it to meet the request of each insurer. A summary of key studies in the public hearing, which included 14 studies with approximately 900 subjects covering 10 improved health outcome categories, was presented with a request on the Benefit Medicare category determination. In a Stanford survey of 253 innovators, the time cycle for coverage for highly innovative technologies like the ReWalk Exoskeleton has averaged 4.7 years. With ReWalk, we have demands from code creation in late 2020 through clinical evidence, are now in the process of determining the benefit category, are preparing to submit our first claims to Medicare, which will also support pricing decisions, we possess supporting advocacy groups, and we have an established plan for case oversight and long-term follow-up, which is all part of moving to the final stages of coverage and reimbursement. We have also developed a detailed workflow and defined processing requirement model post-coverage. We are contracting most of the required short-term resources to process the early cases and we'll build and contract research to support growth in 2023 and beyond. Most of our revenue base is reliant on coverage, but our cases with most insurers have been built on a case-by-case basis without sufficient definition. An important measurement for this market is that in an environment with defined and controlled reimbursement such as we see in the German contracts, our results are becoming reasonably predictable. In the United States, we have several workers' compensation cases that continue through multiple levels of appeals occurring between the individual seeking to walk and their respective insurers. When none were lost from our pipeline, many have been delayed and the process remains unpredictable until coverage and clear definitions are in place, such as we see in places like Germany. I'd now like to turn the call over to Almog for a review of financial details.

Thanks, Larry. Our second quarter revenues for 2022 were $1.6 million, up from $876,000 in the previous quarter and $1.4 million in Q2 2021, reflecting a 9% year-over-year growth. This increase was primarily due to a higher number of ReWalk Personal 6.0 units sold in Europe and a greater number of distributed product units sold in the U.S. We sold 14 units of ReWalk Personal 6.0 this quarter. Additionally, we sold 15 units of MYOLYN for over $216,000, marking our highest quarter recorded for this product line. For the six months ending June 30, 2022, we achieved record revenues of $2.4 million, compared to $2.8 million the previous year, with the decline primarily attributed to fewer ReWalk Personal 6.0 units sold in the U.S. during Q1 2022. In terms of our insurance progress this quarter, we have five new ReWalk insurance decisions for either a new rental or a direct purchase and two VA decisions for new rentals. Our current rental pipeline consists of 20 cases, and our total insurance cases are at 71, with 54 in Germany and 17 in the U.S. Regarding gross margin, it was 48% in Q2 2022, down from 51% in the same quarter last year, mainly due to increased freight and service-related costs. Our operating expenses for Q2 2022 were $5.1 million, compared to $3.8 million in the prior year quarter, driven mainly by higher sales and marketing expenses, which include investments in trade shows and personnel-related costs. General and administrative expenses grew primarily due to professional services associated with the 2022 proxy process. To summarize our quarterly results, we reported a net loss of $4.3 million for the second quarter of 2022, compared to a net loss of $3.1 million in Q2 2021 due to increased spending. Our non-GAAP net loss for the second quarter was $4.2 million, compared to $2.9 million in Q2 2021. We concluded the quarter with $78.8 million in cash. Now, I would like to turn the call back to Larry for some final remarks.

Thank you, Almog. I'd now like to provide more short-term detail for Q2 environment and for the second half of 2022. Key events in the market in Q2 included first, both the U.S. and German markets were almost fully open for the first time since COVID in early 2020, which is now allowing training and placements for home systems. For our clinic-based products, we are seeing capital budgets that are constrained and delays in some planned purchases. Second key event, the company has attended five trade shows year-to-date after zero events in the prior two years. These remain our best source of leads. The third key event, the VA has restarted with zero patients processed in 2020 and only one in 2021. We have already sold one home system year-to-date, have five active trainings in process for the second half of 2022, and multiple evaluations in the coming weeks. With this restart, we have also initiated interaction with local VA medical centers nationwide, along with our supporting community care networks, built an extensive contract program with policy leadership internally and at the VA headquarters in Washington, and externally with their powerful advocacy groups and increased interaction with members of Congress and staff with jurisdiction over VA policy. And the fourth key event, we gained court approval for our share buyback program of up to $8 million and have a board committee that is overseeing parameters. The process is being set up with our banking partners and we plan to start working within our parameters. Next, I'd like to follow up on each of the annual objectives we defined in Q1 and that we review each quarter. First, revenue. We continue to expect year-over-year growth despite the slow movement of pending cases in Q1 and the partial improvement in Q2. The drivers will be the German court case conclusion and subsequent additional supply contracts, growth from the VAs reopening and our focus on training and processing, processing of workers' compensation claims and as we move our first CMS cases forward. The timing of many of these are beyond our control and that limits our ability to provide further guidance at this time. Second, product offering. We seek to add at least one additional commercial product line, which we believe can allow further leveraging of our organizational structure, provide growth, and help to achieve the pathway to profitability. We are focusing on opportunities where some of that may be accretive, others that may offer strategic growth, all our adjacent technologies, and each can help us build infrastructure and each could have meaningful synergy. Third, with CMS, we want to build on the expected Medicare benefit category determination. This is entirely on the track we established in 2021, and we will report as we receive guidance from CMS. Fourth, technology development. Our goal was two device applications for improved ReWalk designs to launch in 2022 and 2023. The first submission was completed in June, and the second is on track before year-end. The timing to launch was dependent on CE marking and FDA 510k processes and some supply chain considerations. Fifth, operational. Controlled but increased investment of an additional $3 million to $4 million year-over-year in reimbursement, product development, market development and access, investor relations, and new business development. We have followed through on reimbursement support in a precise manner, having been able to restart market development and access programs post-COVID and have resourced the process for identifying and pursuing new business development. We are now in the process of engaging an IR team in Q3 to express our vision and progress at a high level for all investors. We will provide updates to each via press releases, quarterly earnings call, and other appropriate communications. This remains the pivotal year for this company and this industry. Other than the slower-than-desired start for sales, all other business building activities are progressing in a positive direction, and we remain highly focused on execution for the benefit of our patients and to enhance shareholder value. Thank you for your time and interest today. I'd like to turn the call over to questions at this stage. Operator, please go ahead with the instructions.

Our first question online comes from Swayampakula Ramakanth from H.C. Wainwright. Please go ahead.

Thank you. Good morning, Larry, and good afternoon, Almog. So just to get started, I know you don't want to talk too much about the German courts this morning. But just want to get an idea in terms of the German court, is the court in recess during the summer months? And when do you think is the next meeting? I understand the court decides when they want to look into your particular case, but just trying to understand the timing of when this could happen?

Yes. The court is not specifically in recess during the summer months. They had been during the COVID period, but have not shown that. Their next scheduled session is on August 3rd that is published. We are not on that docket at this time, or that's actually already passed now. Then the next scheduled one will be sometime in September, but that has not yet been posted.

Okay. Thank you for that. It is certainly encouraging on this side of the pond in terms of VA restart. You gave us a little bit of color on it. But can you give us a little bit more details as to your interactions with the VA and how are these progressing and how does the process work with VA now, just trying to make sure I'm very clear as to how the backlog could be set up and when there could be a real transaction?

The VA varies from location to location, but overall, this is still following the original SOP except patients are now coming back into the centers again. And I would say what I have seen a change in direction in particular, is what's called the community care networks for patients that are not living close to clinics. We're seeing an emphasis on bringing patients through the controlling spinal cord injury center, which always should make sure that the patient is appropriate, but an openness now to let them train near their home. And that is a particularly important feature that doesn't deal with some of the access problems we've had in the past. In particular, we see a few VAs that are starting to lead the way in referring patients and we'd like to see many VAs do that, but we have a decent number now that have started now that the market has reopened. So we've seen the engagement of say at three levels, at the local level with a greater openness through the community care network system, at a senior level with many of the other direct groups that we've now been able to have contact with in management of the VA, and we're also interacting at the congressional level. There seems to be a higher level of interest now in ensuring that these patients are covered and treated in a prompt manner. So it's been encouraging. Numbers aren't huge yet, but they're in the right direction.

Perfect. Regarding the HCPCS code and the efforts to secure the artificial legs benefit category, how will this affect the reimbursement dollars compared to what you currently have? I'm trying to understand how this will also appeal to patients.

The pricing is still being determined, which is the next step. The key aspect here is that we are creating a new category that aligns with the product and includes similar items that have intricate components like motors or gears. Now that we have established a benefit category, we can focus on pricing, which is why we will be putting in patients alongside this effort. This will help us set a final price, but we generally observe that prices in the prosthetics sector are competitive or reasonably comparable to those in the exoskeleton sector. However, I cannot provide specific pricing details until they are officially communicated to us.

Okay. And then on the technical improvement, with the 510(k) and with the FDA now for handling stairs and curves, how much of that is actually a headwind in terms of acquiring new patients to use the ReWalk?

It's not a headwind. I think it's an added benefit that will make them be able to increase utilization. And I think one of the most important features and considerations by insurers is how much people actually use this on a daily basis to improve their health. And if they can use it to go to a neighbor's house who has two steps and no ramp or they can use it to go to restaurants where they are no longer blocked on curbs to get up in areas, it makes a difference. We have found our utilization rates in Germany to be higher than the United States, and they have stair climbing, they're already enabled so adding it to the U.S., we believe will improve utilization for the product and give it a little further differentiation as we're the only product with the ability to go up curbs and up steps and down steps.

Perfect. Thank you very much, Larry, for taking all of my questions, and I will talk to you soon.

Thank you.

Thank you. Our next question comes from Mr. Marty Pollack from KMTR Holdings. Please proceed.

Congratulations, Larry, on the progress with the share repurchase. I see it as 10% of your outstanding shares that hopefully will be retired. Can you provide details on when you'll be able to start buying back shares and the process you plan to follow regarding the stock price? It seems to me that the current undervaluation is significant enough that it would make sense for you to be buying shares almost daily. Is that the outlook you're considering once you have more freedom to buy back stock? Regarding the CMS, it appears that the presumption of designation could attract a lot of new patients or even those who have been waiting for reimbursement designation. Can you share what the backlog might look like going into 2023 for potential cases, even if they haven't been booked yet? As for MYOLYN, I attended that trade show featuring wheelchair games, and I found the product impressive. What is your strategy concerning the distribution agreement for that product? Are you currently focused on renewing and extending it, as it seems to be a significant revenue source? Lastly, you've mentioned the IR surge and that you might be close to forming a team. Can you describe the overall search process? It seems like a crucial long-term goal, especially since ReWalk has been reassigned. There seem to be many moving parts here; how would you characterize the search at this stage?

Mark, thank you. I’ll address all four of your points. Regarding the buyback, we believe this is an ideal time to proceed. The guidelines are established by the Board, and we will determine the volumes in compliance with the SEC requirements and our daily selling limits. We will be entering an open market soon after the current blackout period ends. We will provide quarterly reports on our buybacks, and the Board supports this initiative, which we believe is beneficial for our shareholders. I’ll share more details as they become available. Concerning CMS and reaching out to former patients, an important statistic is that 53% of spinal cord injury patients in the U.S. are enrolled in Medicare and Medicaid within five years due to employment and other life challenges. This effectively more than doubles our target population, and we have a number of patients in this group we've previously been unable to process. We are now starting to engage these patients, including some who had previously inquired about our services. This will significantly expand our available patient pool. On MYOLYN, we are very pleased with the product, which is performing well, and we are actively pursuing to enhance our partnership with them, as it aligns well with our company’s goals for long-term growth. As for the search for a CFO, we are looking for someone with substantial experience in Investor Relations, ideally with a background in that area. We are working with a reputable agency and are close to finalizing that process. Additionally, we are searching for an IR team that can effectively represent us and complement the CFO. We are also assessing opportunities with CMS and maintain that expanding into Germany is a logical step for us in the near future. We plan to provide updates and information at a high level soon, and our goal is to add both the CFO and an IR team in Q3, which is our current intention.

Larry, if I may, just one more question. Actually, obviously, gain were very well utilized. Sales and marketing, SG&A, general and administrative is also going up sharply certainly from year-over-year. The productivity from that obviously has to wait until you can get a lot of the training done behind you. But I would like to know whether as you see the cash, so to speak, drain quarter-to-quarter, did you say it was $3 million to $4 million per quarter that you continue to expect? And just wondering whether at the same time as you look into the second half of the year, why did you not give us full-year guidance, is there any reason to assume that year-over-year, you're less confident that you'll be able to show growth?

Well, first on the selling and expenses. The biggest part of that increase is actually in reimbursement, which falls under that category. So we have invested quite a bit in the support network in working with CMS. But nonetheless, so those will change a little bit to processing expenses as opposed to gaining coverage components. So that has been the bigger increase but we do need a higher sales per rep level to leverage that SG&A cost and by having coverage, we'll be able to do that. On year-over-year, it is still our expectation. We will have year-over-year growth driven by a few factors that should improve here in the second half for us. And specifically, the VA is one. We have real patients that are in their systems now and training. Some of those will close compared to nothing we've had in the past, in the last two years anyway, with COVID. We still expect the German court case to free up some cases. We have workers' compensation claims, even they have made it through some of those will start to make it through and we will also see some additional contracts come through in Germany. So there are enough things to move it year-over-year. The timing of those events will affect how much it moves year-over-year, but we expect positive growth year-over-year.

Thank you very much. Keep up the good work. And obviously, the story is still developing. It seems like 2023 should be the breakthrough year.

We believe so. Thank you for your questions.

We have no further questions at this time. I will now turn the call over to Larry Jasinski for closing remarks.

Thank you, Richard. We opened this with the statement that we see ambulation as a part of everyday life in our sights. And we've called it a pivotal year, and it's because we believe these efforts we're putting forth on coverage are going to allow us to transition to that and the original mission of our company will begin to be met at a meaningful level. So thank you, everybody for listening, and please stay tuned to future announcements from our company. Thank you.

And thank you, ladies and gentlemen. This concludes today's conference. Thank you for participating. You may now disconnect. Speakers, please stand by for your debrief.