Lifeward Ltd. (LFWD) Q2 2025 Earnings Call Transcript
Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
Overview
Despite some positive developments, such as operational efficiencies and Medicare revenue growth, the earnings report reflects mixed signals. Revenue decline, increased GAAP operating expenses due to goodwill impairment, and lack of clear guidance on margin improvements counterbalance the positives. The Q&A further highlights concerns about tariff impacts, unclear margin improvements, and lowered guidance despite expected revenue growth. These mixed signals suggest a neutral market reaction.
Key Financial Performance
Revenue $5.7 million in Q2 2025, a decrease of $1 million or about 15% year-over-year from $6.7 million in Q2 2024. The decline was attributed to lower sales in traditional products and services and timing of deliveries to international distributors.
Revenue from Traditional Products and Services $2.5 million in Q2 2025, a decrease of $600,000 or 19% year-over-year from $3.1 million in Q2 2024. The prior year included $700,000 of Medicare-related revenue recognized for submissions made in 2023 and Q1 2024. Excluding this, Medicare-related sales grew year-over-year.
Revenue from AlterG Products and Services $3.2 million in Q2 2025, down from $3.6 million in Q2 2024. The decline was primarily due to the timing of deliveries to international distributors.
Gross Profit (GAAP) $2.5 million or 43.9% of revenue in Q2 2025, compared to $2.8 million or 41.1% in Q2 2024. The change reflects the absence of a one-time benefit from Medicare-related revenue recognized in Q2 2024.
Gross Profit (Non-GAAP) $2.5 million or 44% of revenue in Q2 2025, compared to $3.1 million or 46.9% in Q2 2024. The year-over-year change reflects the absence of a one-time benefit from Medicare-related revenue recognized in Q2 2024.
Operating Expenses (GAAP) $9.1 million in Q2 2025, compared to $7.2 million in Q2 2024. The increase was largely driven by a $2.8 million goodwill impairment charge due to a significant decline in share price.
Operating Expenses (Non-GAAP) $6 million in Q2 2025, compared to $6.9 million in Q2 2024. The decrease was due to greater efficiency in reimbursement activities, marketing and sales operations, and lower R&D spending.
Operating Loss (GAAP) $6.6 million in Q2 2025, compared to $4.4 million in Q2 2024. The increase was driven by the goodwill impairment charge.
Operating Loss (Non-GAAP) $3.5 million in Q2 2025, compared to $3.7 million in Q2 2024. The improvement reflects operational efficiencies and cost management.
Cash Burn $3.9 million in Q2 2025, down from $5.6 million in Q2 2024 and $5.5 million in Q1 2025. The improvement was driven by operational efficiencies and facility consolidations.
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Operating Highlights
ReWalk 7 Personal Exoskeleton: Achieved FDA clearance in March 2025. Features include improved battery life, push-button control, seamless stair curb activation, and cloud connectivity. Over 20 units installed in the U.S. with positive feedback. CE clearance for Europe is in final stages.
Medicare and commercial insurer wins: Expanded payer base for ReWalk Personal Exoskeleton. Partnership with CorLife accelerated lead pipeline and processing timelines for workers' compensation claims. Recent ruling affirmed ReWalk as reasonable and necessary for medical beneficiaries.
Germany operations: Operating profitably with strong patient community. Expanded AlterG sales through targeted strategies and local market innovation. Germany serves as a proving ground for global market strategies.
In-house manufacturing transition: Transitioned to in-house manufacturing for ReWalk Personal Exoskeleton, resulting in cost savings, improved quality control, and greater production flexibility.
Facility consolidation: Closed AlterG manufacturing facility in Fremont, California, as part of cost-saving measures.
Three core growth pillars: Focused on accelerating commercial adoption, portfolio diversification, and operational excellence. Leveraging payer expansion, channel distribution, and AI integration to improve efficiency and expand market reach.
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Risk or Challenges
Revenue Decline: Year-over-year revenue decreased by $1 million (15%) in Q2 2025 compared to Q2 2024, primarily due to lower sales of traditional products and services and timing of deliveries to international distributors.
Medicare Collection Delays: Payments from Medicare administrative contractors are not occurring on a regular cycle, leading to slower-than-expected collections and impacting cash flow.
Inventory Increase: Inventory levels increased due to the transition to in-house manufacturing and simultaneous production of ReWalk 6 and ReWalk 7, tying up resources and increasing costs.
Goodwill Impairment: A $2.8 million goodwill impairment charge was triggered by a significant decline in share price, creating a gap between market value and book value.
Cash Position: The company has sufficient cash to fund operations only into Q4 2025, necessitating consideration of debt and equity opportunities to support operations and growth plans.
Operational Cash Usage: Cash usage remains higher than expected due to Medicare collection delays and increased inventory, despite operational efficiencies.
Regulatory Approvals: Awaiting CE clearance for ReWalk 7 in Europe, which delays broader market access and revenue generation.
Extended Revenue Cycles: Revenue cycles are inherently extended due to dependency on payer approvals and coverage decisions, slowing revenue realization.
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Guidance & Outlook
Revenue Guidance for 2025: Lifeward expects full-year revenue in the range of $24 million to $26 million.
Non-GAAP Net Loss Guidance for 2025: The company projects a non-GAAP net loss in the range of $12 million to $14 million.
Revenue Growth Expectations: Revenue growth is expected to be gradual over the next few quarters, with meaningful acceleration weighted toward the back half of the strategic plan and beyond.
Operational Cash Usage: The company expects inventory levels to decline over time, improving gross margin and product quality. Operational efficiencies and cost management plans are being implemented to preserve resources.
Medicare Collections: Progress in Medicare payment processing times is expected in the second half of 2025.
Product Launch in Europe: The company is awaiting CE approval for the ReWalk 7 Personal Exoskeleton in Europe, with plans for a subsequent launch.
Pipeline Growth: The commercial pipeline for ReWalk products has grown for three consecutive quarters, with 130 qualified leads in the U.S. and 46 leads in Germany, including 34 active rentals expected to convert to sales within 3 to 6 months.
Cash Position: Lifeward has sufficient cash to fund operations into the fourth quarter of 2025 and is considering both debt and equity opportunities to support operations and growth plans.
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Shareholder Return Plan
The selected topic was not discussed during the call.
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Key Q&A
Q:What was the Medicare revenue for the quarter?
A:In Q2 2024, there was a one-time revenue recognition of approximately $700,000 related to submissions made during 2023 and Q1 2024. Excluding this, there was growth in Medicare revenue compared to Q2 2024, and it was the highest quarterly revenue with CMS since the plan's launch.
Q:How many Medicare leads are there currently?
A:There are more than 130 Medicare leads, which include a combination of CMS, workers' comp, and VA opportunities.
Q:Does the current tariff situation impact the company?
A:The ReWalk Exoskeleton is exempt from tariffs as a medical device. However, there are some tariff issues with China and Taiwan for the AlterG product, but the impact is immaterial at this stage.
Q:Is the 2025 revenue guidance achievable?
A:The company expects growth in ReWalk revenues in Q3 and Q4, indicating confidence in achieving the 2025 revenue guidance.
Q:Where are the 20 units of ReWalk 7 placed since approval?
A:The 20 units are distributed across all channels, with a high focus on CMS Medicare.
Q:How does the ALJ ruling benefit the company?
A:The ALJ rulings shape policies, coverage determinations, and processes, helping secure current coverage despite being a challenging process.
Q:Has the reimbursement dollar amount improved with the introduction of ReWalk 7?
A:For Medicare, the reimbursement amount for ReWalk 6 and ReWalk 7 remains the same. Across other payers, the amounts differ. The company is focusing on market penetration before addressing reimbursement pricing.
Q:What are the plans for sustaining growth in AlterG commercialization?
A:The company plans to expand AlterG through global channel partners, focus on professional athletics and high school sports markets, and renew its go-to-market strategy.
Q:Why was the guidance lowered despite expected revenue growth?
A:The timing of navigating different payers globally has not met expectations. The company aims to set realistic expectations and improve processes to accelerate growth.
Q:What is the impact of bringing manufacturing in-house on margins?
A:Bringing manufacturing in-house is expected to improve margins over time. However, short-term margins are impacted due to increased inventory and parallel production of ReWalk 6 and 7.
Q:What is the significance of ALJ decisions in shaping policies?
A:ALJ decisions help shape policies, coverage determinations, and processes, ensuring appropriate healthcare spending. A high win rate is crucial for influencing these decisions.
Q:What needs to happen in the U.S. to replicate the success seen in Germany?
A:The company needs focused execution, channel partnerships, and rigorous operational discipline to improve reach and penetration in the U.S. market.
Q:What is the growth expectation for MYOLYN and AlterG products?
A:Growth is expected for both MYOLYN and AlterG products compared to last year.
Q:Review of Unclear Management Responses
A:Management avoided providing specific details on the expected margin improvement from bringing manufacturing in-house, stating only that margins would improve over time. Additionally, they did not provide a comprehensive picture of reimbursement pricing changes for ReWalk 7, focusing instead on market penetration.
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Earnings Word Cloud
The most frequently occurring keywords in this quarter's earning call
Act
Almog
Grant President
LLC Research
Personal Exoskeleton
President CEO
President Chief
ReWalk Personal
Research Division
Title
adoption
channel
clearance ReWalk
collection
commitment
core
decrease
delivery
efficiency measure
efficiency reimbursement
engagement
environment
facility
finance role
foundation
house manufacturing
lead process
payer
pillar
portfolio diversification
quality
scale
solution
strategy
value
LFWD Transcript
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Lifeward Ltd. (LFWD) Q3 2025 Earnings Call Transcript
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The earnings call highlights operational efficiencies and a strong pipeline, but concerns arise due to increased operating expenses and cash constraints. The Q&A reveals optimism in partnerships and revenue growth, yet lacks clarity on strategic execution. Despite the positive outlook, uncertainties in Medicare reliance and AlterG sales decline temper enthusiasm. The neutral rating reflects mixed signals, with potential growth balanced by financial and operational challenges.
Lifeward Ltd. (LFWD) Q2 2025 Earnings Call Transcript
Unknown8-14
Despite some positive developments, such as operational efficiencies and Medicare revenue growth, the earnings report reflects mixed signals. Revenue decline, increased GAAP operating expenses due to goodwill impairment, and lack of clear guidance on margin improvements counterbalance the positives. The Q&A further highlights concerns about tariff impacts, unclear margin improvements, and lowered guidance despite expected revenue growth. These mixed signals suggest a neutral market reaction.
LFWD Report
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