Good morning, and welcome to the ReWalk Robotics First Quarter 2023 Earnings Conference Call. Please note that this event is being recorded today. I would now like to turn the conference call over to the Chief Financial Officer, Mike Lawless. Please go ahead, sir.

Thanks, Joe. Good morning, and welcome to ReWalk Robotics First Quarter 2023 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. Earlier this morning, ReWalk issued a press release detailing financial results for the 3 months ended March 31, 2023. The 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 within the meaning of 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, whether as a result of new information, future development, or otherwise, 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 the archived webcast, this call was held and recorded on May 11, 2023. Since that date, ReWalk may have 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 to ReWalk's CEO, Larry Jasinski.

Thanks, Mike. Welcome, everyone. We appreciate your time with us today. We achieved positive results in Q1 and specifically had continued progress on each of our major areas of focus to drive the business over the next three years. We are on track in all respects. The goals remain to move forward with the Centers for Medicare and Medicaid Services (CMS) to rebuild our active case submission base post-COVID, to accept the state court ruling for direct supply in Germany, to advance the design of the ReWalk personal exoskeleton to further improve the user experience, and to identify additional product offerings to build our critical and strategic mass. Sales in Q1 were $1.23 million, in line with internal expectations and in line to support year-over-year growth driven over the second half of 2023. The United States has expanded cases with the VA, and Germany had a significant increase in submissions in Q1, which will translate to improved second half 2023 sales. Expenses were also in line with internal expectations. Our ongoing efforts with CMS to expand coverage of exoskeletons for Medicare beneficiaries, is a key element of our strategic path and a defining point for the exoskeleton industry. We have gained widespread acceptance from SCI societies and key companies in this market. Creating a repeatable process to secure payment for the ReWalk device for Medicare beneficiaries is an essential priority for us. The Medicare SCI population is the largest segment of individuals who could benefit from this technology, and therefore, our single largest potential market segment in the United States. The ReWalk personal exoskeleton is innovative. It has been designed as a breakthrough device by the FDA and was cleared through the de novo pathway. The opportunity is that the value is recognized. There are many individuals in the federal agencies at the highest levels working to help ensure the device is available to patients. The challenge is that CMS and its local Medicare Administrative Contractors (MACs) haven't directly processed anything quite like this previously. The process by which these claims are handled must be created to ensure that payment is consistent and timely. Implementing these new procedures can take time, despite the support and guidance that we have continued to receive from leadership within CMS and the MACs. The good news is that we have made significant progress at this point. For this strategy, we submitted our first Medicare claim, and in Q1, early Q2, we have seen advancement and meaningful feedback on this claim. As we anticipated, the lack of an established process for submitting claims for the coverage of personal exoskeletons presented issues that needed to be addressed in order for the claim to be paid. We received questions on benefit category, documentation, and pricing methodology. We even faced some administrative challenges for Medicare's claims portal operations. This was expected given that this is the first time an exoskeleton claim is moving through the Medicare process. Luckily, both CMS and the MAC involved in this claim have engaged with us to move claim one forward for this beneficiary. Importantly, no significant or insurmountable issues have been identified. Our strategy to start by submitting one claim was purposeful. Based on this experience, we are now ready to submit our next round of claims for additional patient beneficiaries. We aim to submit claims for approximately 10 additional SCI Medicare beneficiaries in Q2, and have received significant positive interest from many more SCI patients and their providers who will be in the queue to follow shortly. Overall, navigating a new category and process for payment is more tedious than any of us would like, but this is progressing meaningfully. We have assembled a great team to support this effort, and we will be relentless because this truly is in the best interest of both patients and our healthcare system. I am confident that with the support we have received from both CMS leadership and the MACs involved, we will continue to make material progress one step at a time. At the same time, we are preparing for the future. We have built our organization to enable scaling our efforts to manage a growing number of claims. This includes putting an experienced program manager in place, defining and implementing quality standards and operating procedures to operate as a CMS supplier, and adding a medical director with a background in physical medicine, rehabilitation, and CMS claims oversight to support our upcoming claims preparation. We have made progress on all of these initiatives. We will expand the structure further to support increased claims in 2024 and 2025. I am confident that the results of our efforts will positively shape the industry in the long term. To reiterate, over half of all SCI patients are covered by Medicare and Medicaid within five years of injury. The results of these initiatives will ultimately define beneficiary access to the only technology solution that enables them to stand, walk, ascend and descend stairs, and perform daily living activities in their home and community. Additionally, on March 7, we announced the achievement of FDA clearance for our stairs-enabled ReWalk personal exoskeleton. This FDA clearance broadens the ability for utilization of the system by removing limits that are a physical reality in areas where people want to walk. Examples are visiting the home of friends or family where they have steps at the entry and no ramp; areas where there are no curb cutouts on city sidewalks; or using the front door of a business that has accessible access around the back. Expanding access to everyday walking in everyday environments is a major leap for those who are blocked from too many activities or locations. The design includes the software and controls to ascend or descend stairs and curbs, and enhanced structural components of the ankle and thigh to further improve the robustness of the design. Our extreme example is Simon Kindleysides in England, who achieved a Guinness World Record last year after climbing 1,444 steps in a 51-story building in one day, which shows the durability of the system. I congratulate him. Our real focus is on everyday life, and this FDA clearance offers increased opportunities to experience the benefits of walking in everyday environments, even when those environments contain obstacles, such as stairs or curbs. We remain active on a significant number of paths to increase our critical mass and develop long-term strategic mass. We are actively seeking opportunities to grow our portfolio of solutions in neuro rehabilitation, both through acquisition and distribution partnerships. This growth will help expand our relationships with customers and enable new opportunities to scale our business in the broader neuro rehabilitation market. I'd now like to turn the call over to Mike for review of the financial details. Mike?

Thanks, Larry. As discussed during our last earnings call, the Q4 '22 performance reflected our success in converting near-term opportunities in our pipeline to revenue. As a result, our focus during Q1 '23 was to continue to deliver revenue while adding to our commercial pipeline and laying the foundation for growth in 2023. In the first quarter of 2023, we accomplished both of these objectives with solid revenue and an improved pipeline. ReWalk reported revenue of $1.2 million, up $0.4 million or 40% in Q1 2023, compared to $0.9 million in Q1 2022. This was in line with our internal budget, and we remain on track to our internal growth targets for the fiscal year. The increase in revenue compared to Q1 '22 was a result of improved ReWalk sales performance in the U.S., partially offset by less traction in the EU. We also grew revenue from our distributed product line, the MyoCycle FES training cycles. In Q1 2023, revenue was over $200,000, up 14% versus revenue in Q1 '22. The sequential decline versus Q4 '22 is believed to be a result of the timing of trade shows and seasonal buying patterns of our customers. We expect to build sales volumes of MyoCycle's sequentially as we move through the rest of the year. Turning to our pipeline metrics within the current markets for the ReWalk product line, which includes individuals covered by the Veterans Administration or Workmen's Compensation Insurance in the U.S. and by private insurance in Germany, the current pipeline of active rentals consists of 18 cases, including 14 in Germany, 12 insurance, and 2 self-pay, and 4 VA rentals. Our overall number of cases in process is 71, with 53 in Germany and 14 in the U.S. As a reminder, these pipeline figures do not include cases that would be eligible for Medicare reimbursement since, although we have established Medicare coverage, CMS is still in the process of establishing a benefit category designation under which we can be reimbursed. If our progress with CMS successfully results in the establishment of an acceptable reimbursement mechanism and payment rate, we expect to add to our list of already identified Medicare eligible patients for inclusion in our future pipeline figures. Moving to gross margin, in Q1 '23, our gross profit was $571,000 or 46.4% of revenue, up 16 percentage points compared to $265,000 or 30.3% of revenue in Q1 '22. This increase in gross margin was primarily driven by several factors: the impact of higher revenue volumes leveraging our fixed production costs, higher average sales prices on the ReWalk devices, and reduced freight and overhead expenses. Operating expenses in Q1 '23 were $4.9 million, up $0.4 million, or 9%, compared to $4.5 million in Q1 '22. Within the functions, R&D spending decreased by $0.2 million or 17%, primarily due to lower spending on professional services resulting from the completion of the stairs project and the accomplishment of significant milestones on the ReWalk 7 project. Selling and marketing expenses increased $0.3 million or 14%, primarily due to higher consulting fees associated with CMS reimbursement-related activity and travel expenses. General and administrative expenses increased $0.2 million or 17%, due to higher employee-related expenses and professional service fees, partially offset by lower insurance costs. Our net loss for Q1 2023 was $4.3 million, or $0.07 per share, compared to a net loss of $4.4 million, or $0.07 per share in Q1 2022. We ended the quarter with $61.9 million of cash equivalents and no debt. Our operating cash usage in Q1 was $4.9 million, which was a decrease from $5.5 million in Q1 of 2022. However, this is an increase sequentially from Q4 '22 because the first quarter of each fiscal year is seasonally the highest quarter for cash consumption. We expect quarterly operating cash usage to decline in Q2 and remain lower than the Q1 level for the rest of 2023. We believe our cash balance provides us ample resources to fund the growth of our existing business, including our efforts to expand reimbursement coverage of the ReWalk device, as well as to pursue attractive business development opportunities to acquire additional complementary products. We believe both of these investment areas are crucial for us to build scale and accelerate our path to profitability. During Q1 '23, we repurchased approximately $771,000 of ReWalk ordinary shares. Our initial 6-month authorization from the Israeli court for the repurchase program expired in January of this year. We filed a motion with the court for permission to continue with repurchases for a second 6-month period, which the court approved. We created a new 10b5-1 plan for the second 6-month period, which automatically repurchases shares when the criteria of the plan are met. Now I would like to briefly comment on our financial outlook for Q2 '23 and the full year 2023. Based on the current pipeline for ReWalk systems, we expect Q2 revenue to be similar to the level of Q1 revenue, with growth accelerating in the second half of the year. For the full year 2023, we anticipate revenue growth of approximately 15% to 20% versus the results in the full year 2022. Importantly, these outlooks for Q2 and FY '23 do not include revenue from sales to Medicare eligible patients. While we will be shipping more ReWalk devices to users and submitting claims to Medicare during Q2, these transactions will not contribute to revenue until the MACs begin to process and pay claims. Until that process gets underway and we have visibility to the processing timetable and payment rates, we will continue to exclude the impact of potential Medicare payments from our financial outlook. With that, I'll turn the call back to Larry for further remarks.

Thank you, Mike. We laid out our goals for 2023 at the start of the year, and I will provide progress on each after each quarter. To restate the goals: to achieve sales growth via our Workmen's Compensation and VA activity in the United States, along with more contracted insurers in Germany; to expand our portfolio of products through distribution agreements or product line acquisitions; and to leverage these activities to move towards breakeven profitable operations with our current capital. To measure our progress in Q1, I have seven areas I would like to highlight. First, expansion of CMS case submissions. Our processes and infrastructure for qualifying and processing claims is operational to meet our goals in 2023. We added experienced talent in terms of preparing the pipeline for submissions. Expanded clinical experience with recruiting a Medical Director with significant experience managing CMS claims, who is also a physical medicine and rehabilitation physician, typically noted as a PM&R physician or physiatrist, with clinical experience treating spinal cord injury patients. Our interaction with the MAC, CMS, and the MACs in Q1 has provided us a better opportunity to understand the structure and approach they recommend, given the newness of exoskeletons. We will submit 10 or more claims in Q2 with a target of submitting 35 to 50 Medicare claims for 2023. The information gained with Claim 1 are key steps to support achieving our goal. We have now tested the system, identified the requirements, and streamlined the claims process. Given these critical steps, we expect to have a repeatable system that will expand in 2024. Progress in establishing coverage for Medicare benefits is especially meaningful for this population, as approximately 30% of U.S. individuals with spinal cord injury are covered under Medicare and another 25% are covered under Medicaid within five years of their injury. Second, expansion of VA training centers. We now have 5 active centers in the U.S., and our goal is to expand that by 5 or more over the remainder of the calendar year. We have new sites recruiting veterans, additional certification training scheduled, and active discussions with 6 new centers presently. Third, in Germany, we have presented updates to DGUV and are scheduling discussions with additional groups for our direct supply contracts now that we have posted the acceptance in Q4 of direct supply from the court proceedings. We were able to increase submissions in Q1 to a record level, and those cases will impact revenue in Q3 and Q4. Fourth, product acquisition. We recognize the operating value and financial efficiency of expanding to multiple adjacent product offerings. We have demonstrated success with our integration of distribution products. These considerations remain highly active, and we will report on these initiatives as they reach conclusions. Fifth, data expansion. On May 9th at ISPOR, which is the Professional Society for Health Economics and Outcomes Research, had a publication titled, 'Powered Exoskeletons for Personal Use in the Home and Community May be Associated with Lower Health Resource Utilization Cost in Veterans with SCI.' This study compared outcomes with 31 exoskeleton users to 54 wheelchair-only users. The results demonstrated that powered exoskeletons for personal use may be associated with lower utilization cost in veterans with SCI. Also, a greater proportion of the exoskeleton group had lower health resource utilization cost the year after their prescription than the wheelchair-only group. Sixth, organic product improvement. The next advancement of the ReWalk system is nearing completion of late-stage development and final preparations for FDA and CE submission. We expect to submit this newest design for FDA review and CE review in the second half of 2023. And seventh, financially, 2023 includes further investment to continue building the required reimbursement and health economic operational infrastructure to support Medicare, VA, and private payers. Our investor relations program has increased resources now to communicate the breadth of activity. Our company slide deck has been updated to provide more information and is now on our website. With the recent and pending milestones, we are now presenting at new investor conferences and with non-deal roadshow activities with the help of our Investor Relations firm, LifeSci Advisors. In conclusion, our overall strategic direction continues to be building the core SCI product line as insurance access is more widely accepted while, in parallel, adding adjacent critical and strategic mass as a neuro rehabilitation technology and product consolidator. We understand and are seeking to complete this level of expansion and growth to achieve a breakeven profitable operation on our current capital. I also wish to thank our shareholders for their continued commitment in supporting these life-changing technologies as we expand this business in 2023 and 2024. I look forward to providing further updates each quarter and through communication of each milestone achieved. I'd now like to answer any questions you may have. So operator, if you could open this up to our audience, we would appreciate that.

And our first question here will come from Swayampakula Ramakanth with H.C. Wainwright.

This is RK from H.C. Wainwright. I appreciate you doing this call. Certainly, this quarter seems to be pretty strong, started off on a good foot. In terms of submissions to the German workers' comp and other insurances you are talking about, what do you think of the timing? Or is there anything that you can give us to see how soon the conversion could happen? Or do you see them going to be lumpy during the second quarter and the second half?

This is Larry, I'll answer it first. We see that the record submissions and the number we got in Q1 are likely to convert in Q3 and Q4. Whether they occur in Q3 or Q4 is more variable, so there's a little bit of lumpiness to this. The submissions we get in here in Q2 would be more geared towards Q4. The increase in submissions, we're beginning to see on the positive side, post-COVID; we have new interest. Our leads are back to pre-COVID levels. Our limiters primarily have been that the rehab centers are not still staffed at levels to where the dates at which we schedule the users are not as soon as we'd like. We want it tomorrow and they're giving us like a week after tomorrow. But other than that, they're progressing reasonably well. So the predicted timing for most of these is 6 to 9 months for a submission to translate to revenue.

On the CMS expansion, the reimbursement expansion, can you give us a little bit more color as to why you're so confident that you learned enough from one case that you think the smoothness of the submission, but also in terms of them processing the claims is going to be better in either the second quarter or in the second half?

I'm going to answer that in two ways. First, our confidence starts with our product. We absolutely, and relentlessly will push this because the data is that good. What I'm seeing at CMS is a recognition and not a challenge of that. This changes lives. CMS seems to want to take care of its beneficiaries. A lot of that is in the data and the science, which is why we're confident. But there's a parallel element. They've chosen to interact with us. We have had a reasonable number of interactions, some of them inefficient. They couldn't answer things the way we wanted, but they worked to help get things through. They've not given us anything that tells us they're going a different path. We've certainly talked to them a fair amount in this process. The advice of putting in additional cases is coming from CMS.

Since they are coming to you, more than you running after them, does that mean the processing time is going to change? Do you have any idea on the processing time? Just like what you talked about Germany being anywhere from 3 to 6 months, or is it just too early to call it?

I'm afraid it's just too early to call it. I described for them it's a brand new process too, and they're trying to fit it within rules and guidelines they have. This product is so innovative and unique, it doesn't fit very well in their structure. That's been the biggest headache we've had so far. They've been trying to figure out where to put it and how to process it. Part of them processing it the way they are now with the MACs is the MACs have a little more flexibility. I think we'll see more structure built over time through CMS, but they haven't given us timelines. That's why it's not yet in our financials forecast, but we believe that's a function of us finishing the process.

Regarding the VA training centers, VA is one organization that has seen this product for the longest. What are you seeing in terms of people getting trained and also them trying to speed up the process? Are there similar issues as in the German training centers regarding staffing?

That varies greatly by site. There are some sites that are well-resourced and able to do it. As we look at the newer centers, some of them are ones that are well-resourced, so that's why they jumped in. The others have progressed towards a model where they'll still handle the patient, but they've used the Community Care Networks (CCNs) as a place to do the training, which has dealt with their staffing challenges. That seems to be a formula some of the other VAs like. Additionally, we were at 3 in the past. We noted that there are now 5, so we've gone up by 2 since we last talked to you, and we're looking at another 5. The coverage for these individuals will start to broaden. One of our other limits was we were really limited to a very small geographic area where the few centers were. As we get to 10, we'll have a greater geographic push, allowing many of these people that have been waiting a path to get their exoskeleton. So the VA has reopened, but we want more of them opened. Getting these next 5 matters, and if we end the year with at least 10 active centers, we will be able to fill the requests of a large percentage of the ones that have been waiting over these past few years.

One last question for me is regarding the exoskeleton being used to climb stairs. How is that translating into potential patients trying to come in and say, now that you have it, I can get trained?

The specific patients look at it as the more they can use this, the better, especially those who are favorable. When you take away limitations, they're more favorable on the product. Most of them are already favorable, and it was a matter of finding a way to get it paid for. The CMS and VA coverage is going to get the majority of the audience. This will really enhance the product for beneficiaries of CMS and the VA because users will utilize it more. That is the bigger value as it takes away obstacles for those who already wanted it.

Our next question will come from Martin Pollack from KMTR.

A few questions, if you can hear me. I'd like to ask you first, with regard to the commentary you provided, which was quite useful and helpful in terms of providing more transparency. When one sees the quarter results, let's say, you're not on that conference call, you virtually get nothing in terms of outlook or the actual text of the release. So, let me ask you a few questions on that. Based on what you're saying, it seems to be very much a second half loaded result here. When you say 15% to 20% year-over-year growth in the second half, are we talking about the second half off of results last year? Because the second half of 2022 was $3.1 million in revenues.

Hello, Marty. This is Mike. The 15% to 20% comment related to full year 2023 compared to full year 2022. This would imply a growth rate north of 15% to 20% for the second half if you're looking at the second half in isolation. The growth in the second half is going to be higher. So, adding the two together, the growth year-over-year is our view of the outlook is 15% to 20%, excluding any impact from Medicare.

That actually suggests $5.5 million in revenues in 2022. You'll exceed that number pretty solidly. Yet, you didn't think it was valuable enough to put it in a commentary. As one sees the revenue number, it's just kind of the rate we've been seeing everywhere. Obviously, Q4 was strong, and Q3 weak. Where is the transparency that could have come through in your detailed summary?

We need higher volumes to achieve that level of gross margin. We need higher revenue volumes to leverage our fixed costs to reach that level.

Based on this quarter, 47% gross margin. If you're looking at the second half, you would think that gross margin would be considerably higher for the second half revenues. Is that correct?

I'm not going to guide to margins for the year or for the second half. Right now, I'm more comfortable talking about the top line. We believe that with higher volumes, we will achieve higher margins. Part of the challenge with our margins right now is that it's off a very small revenue base. As we build that quarterly revenue volume, the margins will increase. But until we get there, I'd rather not comment specifically on discrete levels.

Regarding the notion that you can achieve profitability without a meaningful acquisition, how important are acquisitions? Because I don't see this commentary suggesting this is single most important outside of CMS. Where do you see that as a priority?

It's very important. We've stated over the past two years the intention to add product lines to leverage the cost structure. It allows us to work with our customer base and utilize our existing infrastructure. This is an important business strategy we are pursuing, but prudently. Whatever we add must meet our criteria as a company. We're not looking to add things just for the sake of adding them. We believe it will shorten the timeline to profitability.

Are you involved in serious discussions with a particular acquisition target?

I can confirm that we have looked at many companies and have had discussions where we believe they make sense, but I can't comment beyond that.

That depends on CMS to some extent. There are circumstances where it could be. We have developed models of what it would take to get us to profitability on our current cash. If coverage were more favorable and more easily achieved, it could be more readily done with ReWalk as a standalone product, but we think it's most efficiently done by having a few product lines with the same call points.

Our next question will come from Daniel Yorgrove with NBS Investments.

I'd like some color on the repurchase program. You said earlier that, I think in Q1 it was $771,000. I was wondering if that's an inclusive number or if it refers to just a quarterly figure. Additionally, what's the progress or strategy in trying to increase the stock price?

You want to start with the buyback, and I'll get into the other items?

The $771,000 I quoted relates only to activity in Q1 of this year.

What’s the total amount from the inception of the buyback to now?

$3.3 million.

So, you are on projection in this next 6 month cycle to get the rest purchased or is it going to take another execution of a second 6-month term?

It's highly dependent on the share price and the volume of shares that are traded. I can't give that answer because we don't know until we get there.

There are several things that should impact our stock price. Milestones are the biggest. The process with CMS changes this industry and this company once we cross that milestone. The addition of other product lines would also change our company profile. We believe that we are reasonably close in terms of milestones, but with the government, you can't entirely define the timing. However, they're working with us. In parallel, we've invested in improving investor relations and believe this will help drive interest among investors around our milestones and long-term path. We focus on those areas to improve stock price if we can achieve these milestones and communicate effectively.

As a long-term investor, I believe strongly in the product. I hope for a better flow of information. It's hard to come by. Any effort you could put into investor relations and a better flow of information would be highly appreciated.

With the addition of LifeSci Advisors, we believe they will help us significantly as they have experience with many companies. Mike and I do our best to respond to every investor when they have questions. We are glad to take calls, emails, or texts at any time.

And this concludes our question-and-answer session. I would like to turn the conference back over to Larry for closing remarks.

I would like to thank everybody for participating. The confidence expressed around CMS expansion and our confidence in where this is going is key. This product works; our data is compelling. We see the market slowly reacting to it. CMS has made significant progress with us over the past 6 to 12 months. This is why you're seeing us put in 10 claims in Q2 and 35 to 50 for the year. These are game changers. That’s the most important thing to watch regarding when and how they develop. Thank you, and for those looking for additional information, please reach out to LifeSci Advisors, Mike, or myself, and we will communicate everything possible.

The conference has now concluded. Thank you very much for attending today's presentation. You may now disconnect your lines.