Good day, and welcome to the Lifeward First Quarter 2024 Earnings Conference Call. Please note, this event is being recorded. I would now like to turn the conference over to Mike Lawless, Chief Financial Officer. Please go ahead.

Thank you, Dave. Good morning, and welcome to Lifeward's First Quarter 2024 Earnings Call. I'm Mike Lawless, Lifeward's Chief Financial Officer, and with me on today's call is Larry Jasinski, our Chief Executive Officer. Earlier this morning, Lifeward issued a press release detailing financial results for the three months ended March 31, 2024. The press release and a webcast of this call can be accessed through the Investor Relations section of the Lifeward website at golifeward.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 Lifeward management as of today and involve risks and uncertainties, including those noted in our press release and our 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. Lifeward specifically disclaims any intent or obligation to update these forward-looking statements, whether as a result of new information, future developments, or otherwise, except as required by law. A replay of this call will be available shortly after completion, accessible from the dial-in information in today's press release. The archived webcast will be available in the Investor Relations section of our website. For the benefit of those who may be listening to a replay or the archived webcast, this call was held and recorded on May 15, 2024. Since that time, Lifeward 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. And with that, I'll turn the call over to Lifeward's CEO, Larry Jasinski. Larry?

Thank you, Mike. Good day to all. Let me start with a quote from Eric Himbert. Eric is a remarkable young man, who became paralyzed and was the first person to have his ReWalk system paid for by Medicare. He said, 'For me, the ReWalk exoskeleton is a medical necessity. When I started walking again with my ReWalk, my life changed. Increased accessibility of the ReWalk Personal exoskeleton by way of Medicare reimbursement has the power to change lives. I want people like me to know there is still life to live.' ReWalk now Lifeward, initiated efforts with CMS in 2020. Two occurrences were critical to what I call absolute success. Exoskeletons have been codified in a Medicare benefit category and have an established fee schedule payment. This is achieved with thanks to many. The diligence done by CMS, support from the medical community, society support from leading organizations such as the ITEM Coalition, which is a nonprofit devoted to access, and MDMA, the Medical Device Manufacturers Association, United Spinal, the Christopher Reeve and Dana Reeve Foundation, the Paralyzed Veterans of America, broad bipartisan support from key members of Congress and many individual letters from ReWalkers and their families. These all made a difference. This absent success means we can provide access to those who are medically qualified, we can change lives, and we can build a sustainable company and industry. We are proud to have led this effort. Q1 results were sales of $5.3 million, an increase of 340% versus Q1 2023. These were led by the approval of 14 Medicare claims and gaining sufficient information to establish a basis for revenue recognition of our submissions. We have submitted 35 claims and have 21 still pending. Moving forward this calendar year, working with the current market parameters, we plan to deliver 60 to 75 more systems to qualified Medicare patients. Our AlterG Anti-Gravity business required a period early in Q1 for training and transition, which limited sales as we were forming the new field organization with 15 U.S. territories. Subsequently, the volume of bookings and sales gained traction to traditional levels by March, which is continuing into Q2. With the enlarged sales organization and a new product introduction at midyear, we anticipate that the AlterG Anti-Gravity offering will grow in parallel with the growth from ReWalk's penetrating the market for Medicare beneficiaries. As a result, our annual guidance for 2024 with sales of $28 million to $32 million remains unchanged. We are pleased to achieve our Q1 guidance of between $5 million to $5.5 million with sales of $5.3 million. While we have affirmed our annual guidance, the quarterly patterns of processing with CMS need more time to emerge, and the uptick from our new AlterG Anti-Gravity system will define the rate of growth for that business. Our focus will be on achieving year-end numbers with the understanding that there will be some lumpiness in the revenue within the quarters. Our guidance on earnings remains a reduction in our operating loss to the low double-digit teens via a quarter-by-quarter reduction of our loss in burn rate. This reduction is driven by revenue growth and leveraging organizational efficiency. The level of investment in obtaining CMS payment and R&D will also lessen over the year. Getting to this juncture has taken a long time. We are incredibly appreciative of the support of our shareholders, our customers, and our internal team. The path we are pursuing is top-line growth with operating efficiency that allows us to reach breakeven in 2026 on our current cash. Now I'd like to turn the call over to Mike Lawless for a financial review. Mike?

Thank you, Larry. Before I review the results of the quarter, I want to remind everyone that our first quarter GAAP results reflect amortization of intangible assets resulting from the purchase price allocation for the acquisition of AlterG, transaction-related expenses and credits, and integration and rebranding expenses, which can obscure investors' visibility into the underlying operational performance of Lifeward. In order to facilitate the understanding of both the GAAP results and the operational results of Lifeward, I'm going to discuss Q1 '24 on both a GAAP and a non-GAAP basis, which excludes the items listed in the reconciliation table provided in today's earnings release, and I encourage you to reference these tables as I discuss the financials. Lifeward reported revenue of $5.3 million in the first quarter of 2024 compared to $1.2 million in the first quarter of 2023, up $4.1 million or 340%. The revenue from the sale of ReWalk systems was $2.2 million in Q1 '24, up $1.3 million from Q1 '23, driven by the Medicare approvals. Revenue from AlterG was $2.8 million in the quarter, which was below our expectation due to the temporary impact of the Q1 '24 integration and training of the former ReWalk and AlterG commercial teams, which resulted in reduced sales capacity in the quarter. Fortunately, these activities were completed in Q1 '24, and we have experienced improved sales effectiveness and productivity thus far in Q2 '24 compared to the prior quarter. Other revenue, consisting primarily of sales of MyoCycles, was $0.3 million, up $0.1 million from Q1 '23. I'd like to discuss two issues which affect our revenue recognition for sales of ReWalk systems to Medicare beneficiaries and which also helps you to interpret the financial results. First, in order for us to submit a Medicare claim for payment, the ReWalk system must be delivered and the Medicare beneficiary takes ownership. Typically, this completes the performance obligation and satisfies revenue recognition requirements. However, for the first 35 Medicare systems we provided, we did not initially recognize any revenue because we did not know which claims would eventually be approved nor did we know the final payment amount. More recently, with Medicare establishing a payment and a track record of Medicare claims approvals, we now have enough information to recognize Medicare revenue upon delivery of the system. As a result, in Q1 '24, we took revenue on the units that we had previously provided to customers in which we're in service by applying a discount factor to the Medicare revenue, assuming that a percentage of the claims may not eventually be approved. As the volume of claims that are processed continues to grow, we will monitor our ongoing approval rate and adjust the discount factor as needed to reflect our experience. There are a couple of implications for our financials that I want to point out. First, since we are recognizing only a portion of the Medicare revenue about 100% of the product cost, this revenue methodology serves to initially reduce our gross margins by the amount of revenue we are reserving. Second, there is a portion of revenue from these sales, which we can later recognize when the claim is eventually approved, thereby recognizing the full amount owed by Medicare. In total, if all the prior Medicare claims that we recognized in Q1 are later approved, we can recognize an additional approximately $300,000 of revenue with no corresponding cost of sales. In future quarters, we expect that the initial lower margins on the new Medicare claims submitted will be supplemented by the additional revenue recognized for the approved claims from prior quarters. Second, there's another factor that affects our ability to recognize revenue, and that is the status of each customer's supplemental insurance. To review, Medicare covers 80% of the cost of goods and services it approves. The other 20% is the out-of-pocket paid by the Medicare beneficiary who may have supplemental insurance. Since we have no claims approval history with the supplemental insurance, our revenue policy will be conservative and we will recognize revenue for the remaining 20% of the transaction value only upon payment from the supplemental insurance provider. The final implications of this are the same as the ones for the Medicare revenue that I described earlier. Initially, our gross margins are reduced by the revenue not recognized by the supplemental insurance payments. However, we have an additional approximately $400,000 of revenue that we could recognize in future quarters as supplemental insurers pay claims. Taking together these two factors, in Q1 '24, we have reserved approximately $700,000 of revenue pending approval of claims by Medicare and supplemental insurance, and this affects our gross margin in Q1 '24 by approximately 8 percentage points. Moving to pipeline. Our pipeline metrics showed improvement in the first quarter across our two major product lines. For ReWalk systems, the current pipeline of active rentals consists of 32 cases which is up 8 from last quarter and is broken down with 24 in Germany, 6 in VA hospitals and 2 with self-pay individuals. As of the end of Q1 '24, our overall number of ReWalk cases in process was 91 with 54 in Germany and 37 in the U.S., many of which are for Medicare beneficiaries. For AlterG systems, we ended Q1 '24 with orders of 68 AlterG systems in backlog. This is up 22 units from the Q4 '23 backlog level. The higher AlterG backlog, combined with an improved pace of new leads and bookings so far this quarter gives us confidence in improved sales performance for AlterG Systems in Q2 '24. Moving to gross profit. In the first quarter of 2024, our GAAP gross profit was $1.4 million or 26.4% of revenue compared to $0.6 million or 46.4% of revenue in the first quarter of 2023. On a non-GAAP basis, which excludes the items listed in the attached non-GAAP reconciliation table, non-GAAP gross profit was $1.8 million or 33.7% of revenue in the first quarter of 2024 as compared to 46.2% for the first quarter of 2023. There are 2 primary drivers which adversely affected gross margin in Q1. First, the low volume of AlterG revenue caused by the temporary impact of the integration and training of the former ReWalk and AlterG commercial teams contributed to lower absorption of production and overhead costs in our factory. The impact of this was approximately 4 percentage points of margin in Q1. The second major factor was the initial revenue recognition that we applied to the Medicare claims that I previously discussed. As I described, if we had not reserved for the potential for some of these claims to be denied, we could have achieved up to an additional 8 points of gross margin. Taken together, these two factors contributed up to 12 percentage points of margin impact in Q1 '24. It's important to recognize that this revenue and margin is not permanently excluded from our results. Importantly, as claims are approved, we will recognize this income in future periods. Operating expenses. GAAP operating expenses were $7.9 million in the first quarter of 2024, up $3.0 million or 60% as compared to $4.9 million in Q1 '23. On a non-GAAP basis, which excludes the items listed in the attached non-GAAP reconciliation table, adjusted operating expenses were $7.3 million in Q1 '24 as compared to $4.5 million in Q1 '23, a $2.8 million increase. The primary driver of this increase is the additional headcount from the acquisition of AlterG and the build-out of our commercial resources. We expect Q1 '24 to have the highest operating expense level for 2024 due to activities related to the integration and training of the commercial team, seasonal factors and the phasing in of additional acquisition savings in future quarters. Our GAAP operating loss for the first quarter of 2024 was $6.5 million compared to an operating loss of $4.3 million in the first quarter of 2023. On a non-GAAP basis, which excludes the items listed in the non-GAAP reconciliation table, the operating loss was $5.5 million in Q1 '24 compared to $3.9 million in Q1 '23. The operating loss was affected by the same factors I described in the reduced gross margin. As Larry described, we expect our quarterly non-GAAP operating loss to narrow considerably as we move through the year as our sales volume ramps up. We ended the quarter with $20.7 million in cash and equivalents and no debt. Our cash usage in Q1 was $7.7 million, which was higher than expected. The first quarter of each year traditionally consumes the highest amount of cash because of payouts of variable compensation, annual payments for insurance policies, and seasonally higher sales and promotional spending. This past quarter, there were additional factors, including the lower gross margin I described earlier, the timing of revenue recognition and receivables collection, severance payments, and fluctuations in our working capital. We expect that a portion of the overage from Q1 should be recovered as we move through the year as our sales volume ramps up, gross margins improve, and working capital fluctuations normalize. Now I'd like to discuss financial guidance. As we stated at the beginning of the year, we expect full-year revenue of $28 million to $32 million, which we continue to believe is an appropriate range. The quarterly revenue should build through the year based on the increasing contribution from Medicare and sales of the AlterG product line, which will be augmented by a new product introduction in mid-2024. With that, I'll turn the call back to Larry for further remarks.

Thank you, Mike. I would now like to provide more detail on our market development and financial goals. The key objectives after gaining a defined Medicare payment rate and completion of the commercial integration from the ReWalk AlterG in the second half of 2023 are: number 1, execution with sales. Number 2, organizational implementation infrastructure to support Medicare claims submission to successfully penetrate this new and now-emerging market. Number 3, market development in terms of filling the funnel with appropriate potential users of the ReWalk system. Number 4, managing the reduction in our operating loss quarter-over-quarter to meet our goal of breakeven operations. And number 5, launch of the new AlterG product at about midyear in preparation for the launch of the new version of the ReWalk post-FDA clearance. Let's expand on each of these objectives. First, sales. We now have what we have sought for 5 years, market access to exoskeletons for a sizable number of potential beneficiaries. We have the organization resourced, trained, stabilized, and are ready to execute sales of $28 million to $32 million for 2024. Second, capacity to implement. We have designed infrastructure based on our experience with the first 35 submissions. We are targeting the ability to process approximately 100 systems in 2024, 200 in 2025, and 400 in 2026. These are targets we can adjust as demand requires. Essential requirements are ensuring HIPAA compliance with Medicare regulations, scaling flexibility using internal and external resources, and Lifeward has the ability to capture data to qualify and quantify our progress. Third, market development. Adoption of life-changing and disruptive technologies takes time and focused development efforts. In the simplest terms, we must fill the funnel, working with health care providers and potential users. It starts with education on selecting the qualified candidates and having the infrastructure that is efficient and streamlined for the prescriber and the user. Our communication pathways to expand include extensive digital lead generation, utilizing our direct sales team for in-clinic and physician education to identify appropriate patients, and establishing centers of excellence throughout the United States. Also important for our long-term growth is working with medical professional organizations to establish treatment guidelines for clinicians. Fourth, reducing our operating loss. This is accomplished from a combination of top-line growth and planned improvement in organizational efficiency. Our revenue needs to reach $50 million to $55 million annually for breakeven operations with reasonable ongoing investments. Our internal focus efforts include margin improvement, further consolidation for operational efficiency in terms of both cost and effectiveness, and new product activity. Fifth, new product launches. We plan to launch a new AlterG Anti-Gravity model, which has features and pricing specifically designed to address the needs of smaller clinics. We expect to launch this design in the coming months. Depending on our FDA submission timing and the clearance progress, we will bring to market the seventh generation of the ReWalk design. It is part of the constant advancement of adding new features and improvements from our extensive interaction with our users. This is an advantage of being first to market and having the most extensive base of field experience. It is time to start scaling this enterprise from the milestones achieved. For Board refreshment and leadership, we added Mike Swinford to our board early in Q2 after Medicare established a payment rate for the ReWalk. He brings extensive knowledge of the industry, understands the requirements of market development, and has experience with the fundamentals of effective commercialization. Internally, we have built the commercial team as needed for implementation for both ReWalk expansion and for AlterG growth. We are on our way. So everybody, thank you for your time today, and I'd like to open this up for questions.

The first question comes from Swayampakula Ramakanth with H.C. Wainwright.

This is RK from H.C. Wainwright. Actually, congratulations. I think this is a great start to the year with everything in place. As I said, your first goal of being execution of sales, I think that's finally we get to really talk about this, which is very good. In terms of sales itself a little bit north of $2.5 million in sales recognition for the first quarter, I know Mike gave a lot of minutia on how to think about the sales cadence from here. I'm trying to understand and be clear in my head, did that include all of the 35 placements that you have done so far? Or what part of it is included and what part of it is not included? I tried my best to follow all the details. I have not, so I'll go back and check, but I just wanted to make sure how much of those 35 units have been recognized this quarter?

That's a good question. I'm glad to clarify that for you. So if you recall in Q1, we recognized revenue for one of the 35 in Q1 because we actually received payment in that case. To satisfy all the requirements I outlined before, we knew the amount and we knew it had been approved because we had received payment. So in that case, we took revenue in Q4 for that one isolated unit. In Q1, now with the current quarter reporting, we will recognize revenue for the remaining units that are in service now, yes. So as I described, we reserved for two sets of clarifications. One is the approval of the Medicare system. And the second one is the payment by the supplementary insurance company.

So just to be clear, it's 34 units then?

Correct.

Okay. And in terms of paperwork and process to get the said reimbursement amount from Medicare. Is that process in place? Or you're still trying to iron out some kinks in the process itself?

And this is Larry, RK. We are completely ready and everything is in place. We are ready to run. We've learned what we needed to learn and have an organization that we've really tried to streamline it. The thing that matters to us when a physician writes a prescription, we want the process to be easy for them, and we follow up and take it through the system. So we're ready to go. And that's why filling the funnel is a focus. We know what we need to do and are very thrilled with how they've been processed, especially these three weeks since approval, they've been really rapid, and we're really encouraged.

So talking about that, I know Mike made some comments about seeing a good flow of interest during the second quarter. Can you add to those comments, please?

We have seen a significant increase in our leads, which is encouraging, and we are integrating them into our system. This is a crucial measurement for us. When I mention the need to fill the funnel, we also engage with many physicians who are unaware that this service can now be covered for their patients. A key part of the communication effort across our 15 sales territories is to inform and educate hospitals and clinics that this service is now covered. Despite our extensive publicity efforts, we still encounter responses like, 'I didn't know this is covered.' We aim to reduce such instances through education. Another major initiative is personal engagement with every major center that refers patients, beyond our digital efforts. Additionally, we are focused on establishing self-sustaining groups by collaborating with large centers that have strong satellite networks. For instance, if we have a core SCI center with 15 or 20 nearby sites, we want them to enhance their networks and referrals, and we are providing the necessary support for that. There is a lot of interest, and we need to expand it to reach our targets of 100, 200, and 400 over the next few years. We have developed a plan and organization that we are currently executing. While I need to present the overall results, the initial outcome shows a substantial year-over-year increase in incoming leads.

This concludes our question-and-answer session. I would now like to turn the conference back over to Larry Jasinski for any closing remarks.

Thank you, Dave. For everybody that attended today and for everybody listening, we greatly appreciate your time and our support during this period where we were trying to establish a base to grow this business. And as I closed at the end of the scripted session, we're at that time. And we're excited about it, and we have the right team in place. I use the analogy of we've been standing on the sidelines getting ready to get in the game. We're in the game now. And we have to do this well, and it's time to execute as I listed on our five goals. So if anybody has further questions, feel free to reach out to Mike or myself or team members of our team, and we'll try to provide every piece of information we can. Thank you, everybody.

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