ReWalk Robotics Ltd. (NASDAQ:RWLK) Q1 2023 Earnings Call Transcript May 11, 2023

Operator: Good morning and welcome to the ReWalk Robotics First Quarter 2023 Earnings Conference Call. All participants will be in a listen-only mode for the duration of the call. After today’s presentation, there will be an opportunity to ask questions. Please note that this event is being recorded today. I’d now like to turn the conference over to Chief Financial Officer, Mike Lawless. Please go ahead, sir.

Mike Lawless: 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 is Larry Jasinski, ReWalk’s Chief Executive Officer. Earlier this morning, ReWalk issued a press release, detailing financial results for the three months ended March 31, 2023. This 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 developments 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 archived webcast, this call was held and recorded on May 11, 2023. Since that date, ReWalk 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 the ReWalk’s CEO, Larry Jasinski.

Larry Jasinski: Thanks Mike. Welcome everyone. We appreciate your time with us today. We achieve 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 with the acceptance of 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 improve second half 2023 sales. Expenses were also in line with internal expectations. Mike will addresses further in the financial results section. 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 population segment of individuals who could benefit from this technology, and therefore, our single largest potential market segment in our single largest potential market 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, being on the leading edge is both an opportunity and a challenge. The opportunity is that the value is recognized, so there are lots of individuals in the federal agencies at the highest levels that are working to help ensure the device is available to patients. The challenge is that CMS and its local Medicare administrative contractors, MAX, haven’t directly processed anything quite like this previously, so the process by which these claims are handled must be created to ensure that payment is consistent and timely. The reality is that implementing these new procedures can take time despite the support and guidance that we have continued to receive from leadership within CMS and MAX.

And the only way to refine this is to submit claims in order to test the process, to clarify what needs to be clarified and to fix what needs to be fixed. The good news is that we have made significant progress to this point. For this strategy, we submitted our first Medicare claim in Q1, early Q2 has seen advancement and meaningful feedback on this claim. As we anticipated the lack of an established processor submitting claims to the coverage of personal exoskeletons have presented issues that need to be addressed in order for the claim to be paid. We received questions on benefit category, documentation and pricing methodology. We even had some simple administrative challenges for Medicare’s claims portal operations. Again, this was to be expected given that this is the first time an exoskeleton claim is moving through the Medicare process.

Fortunately, both CMS and the MAX involved in this claim have engaged with us to move claim forward for this beneficiary. Importantly, no significant or insurmountable issues have been identified. Our strategy to submit one claim to start was purposeful. Based upon 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 in a meaningful manner.

We have put a great team together 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 MAC 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 of 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 and rehabilitation and in CMS claims oversight to help with 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 again, this is important because over half of all SCI patients are covered by Medicare Medicaid within five years of injury. So the results of these initiatives will ultimately define beneficiary access to the only technology solution that makes it possible for them to stand, walk, a send decent stairs and perform activities of daily living in their home community. We also have technical progress in parallel with the CMS, MAX processes. On March 7th, 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 in the ramp; areas where there are no curb cutouts on city sidewalks, or using the front door of a business that has an accessible access around back. Expanding access to everyday walking in everyday environment 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 decend steps and curves and enhance structural components of the ankle and by 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 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 groups. 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 and neuro rehabilitation, both by way of acquisition and distribution partnerships. This growth will help to expand our relationships with customers and will 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 a review of the financial details.

Mike?

Mike Lawless: Thanks Larry. As discussed during our last earnings call, the Q4 2022 performance reflected our success in converting near-term opportunities in our pipeline to revenue. As a result, our focus during Q1 2023 was to continue to deliver revenue while adding to our commercial pipeline and lay the foundation for growth in 2023. 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 the first quarter of 2023 as compared to $0.9 million in the first quarter of 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 2022 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 2022. The sequential decline versus Q4 2022, we believe 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 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 workers’ 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 sub 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 our list of already identified Medicare eligible patients for inclusion in our future pipeline figures. Moving to gross margin. In Q1 2023, our gross profit was $571,000 or 46.4% of revenue, up 16 percentage points as compared to $265,000 or 30.3% of revenue in Q1 2022.

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 2023 were $4.9 million, up $0.4 million or 9% as compared to $4.5 million in Q1 2022. Within the functions, R&D spending decreased by $0.2 million or 17%, primarily due to lower spending in professional services due to the completion of the stairs project and the accomplishment of significant milestones on the ReWalk seven 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 the first quarter of 2023 was $4.3 million or $0.07 per share as compared to a net loss of $4.4 million or $0.07 per share in the first quarter of 2022. We ended the quarter with $61.9 million of cash and 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 2022 because the first quarter of each fiscal year is seasonally the highest quarter for cash consumption. The timing of annual payments for items such as insurance renewals as well as the payment of annual variable compensation typically occur in Q1.

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 2023, we repurchased approximately 771,000 shares — excuse me — $771,000 of ReWalk ordinary shares. As you may recall, our initial six-month authorization from the Israeli court for the repurchase program expired in January of this year.

So we filed a motion with the court for permission to continue with repurchases for a second six-month period, which the court approved. We created a new 10b5-1 plan for the second six-month period, which automatically repurchase shares when the criteria of the plan are met. Now I would like to briefly comment on our financial outlook for Q2 2023 and the full year 2023. Based on the current pipeline for ReWalk systems, we expect Q2 revenue to be similar to the level in 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 full year 2022. Importantly, these outlooks for Q2 and FY 2023 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, as Larry described, these transactions will not contribute to revenue until the MAX begin to process and pay claims. Until that process gets underway, and we have visibility to the processing time table 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.

Larry Jasinski: Thank you, Mike. We laid out our goals for 2023 at the start of the year, and I will provide progress on each of them 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. Number two, to expand our portfolio of products through distribution agreements or product line acquisitions; and number three, 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 position, typically noted as a PM&R physician or physiatrists, with clinical experience treating spinal cord injury patients. Our interaction with the CMS and the MAX 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 one are key steps that support achieving our goal. We have now tested the system, identified the requirements and streamline the claims process.

Given these critical steps, we expect to have a repeatable system that will expand in 2024. Progress with establishing coverage for Medicare benefits is especially meaningful for this population, as approximately 30% of U.S. individual spin accord injury are covered under Medicare and another 25% are covered under Medicaid within five years after their injury. Second, expansion of VA training centers. We now have five active centers in the U.S., and our goal is to expand that by five or more over the remainder of the calendar year. We have new sites recruiting veterans, additional certification training scheduled and active discussions with six new centers presently. Third, in Germany, we have now presented updates to DGUV and are scheduling discussions with additional groups for our direct supply contracts now that we have post 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 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 costs 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 PEP 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 Freeview 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 support, Medicare, VA and private payors.

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 is now on our website. With the recent and pending milestones, we are now presenting at new investor conferences and when non-deal road activities with the help of our investor relations firm, life science 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 consolidated. 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 change 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 us up to our audience, we would appreciate that.

Q&A Session

Operator: We will now begin the question-and-answer session. And our first question here will come from Swayampakula Ramakanth with H.C. Wainwright. Please go ahead with your question.

Swayampakula Ramakanth: Thank you. This is RK from H.C. Wainwright. Good morning, Larry and Mike. 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 Germany workers’ comp and other insurances that you’re 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?

Larry Jasinski: Yeah. This is Larry. I’ll answer it first. We see that the record submissions and the number that we got in, in Q1 are likely to convert in Q3, Q4. Whether they occur in Q3 or Q4 is more variable. So there’s a little bit of lumpiness to us. And then, of course, the submissions we get in here in Q2 would be more geared towards Q4. So the increase in submissions we’re beginning to see on the positive side, post-COVID, we’ve gotten new interest. Our leads are back to pre-COVID levels. Our limiters primarily have been 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 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 six to nine months for a submission to translate to revenue.

Swayampakula Ramakanth: Perfect. On the CMS expansion, the reimbursement expansion. So 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 — not only the smoothness of the submission, but also in terms of them processing the claims is going to be better as in — either in the second quarter or in the second half?

Larry Jasinski: I’m going to answer that two ways. First, our confidence starts with our product. We absolutely and relentlessly will push this because the data is that good. And what I’m seeing at CMS is a recognition and not a challenge of that. This changes lives, and CMS seems to want to take care of its beneficiary. So a lot of that is in the data and the science 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 to the way we want it, but they work to help get things through. They’ve not given us anything that tells us they’re going a different path. And we’ve certainly talked to them a fair amount in this process. And the advice of putting in additional cases is coming from CMS.

Swayampakula Ramakanth: And then as you said since they are coming to you more than you running after them, does that mean the processing time is going to — do you have any idea on the processing time, just like what you talked about Germany being anywhere from three to six months? Or is it just too early to call it?

Larry Jasinski: 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 in within rules and guidelines they have. And this product is so innovative and unique. It doesn’t fit very well in their structure. And 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. And part of them processing it the way they are now with the MAX is the MAX have a little more flexibility, and I think we’ll see more structure built over time through CMS. But they haven’t given us time lines. That’s why it’s not yet in our financial forecast, but we believe that’s a function of us finishing the process.

Swayampakula Ramakanth: Okay. Regarding the VA training centers, VA is one organization that has seen this product for the longer stock time. With COVID or basically no COVID at this point, so what are you seeing in terms of people getting trained and also them trying to speed up. Is there — are there the same similar issues as in the German training centers in terms of people than them having enough personnel to train and other such issues.

Larry Jasinski: That varies greatly by site. There are some sites that are well resourced and able to do it. And 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 of — they’ll still handle the patient, but they’ve used the community care networks, the CCNs, as a place to do the training, which is dealt with their staffing challenges. And that seems to be a formula or some of the other VAs like. The addition was some we were three in the past. We noted that there are now five. So we’ve gone up by two since we last talked to you, and we’re looking at another five. 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, and that will allow 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. So getting these next five matters. And if we’re ending the year with at least 10 active centers, we’re going to get to be able to fill the request of a large percentage of the ones that have been waiting over these past few years.

Swayampakula Ramakanth: Thank you. One last question from me is, so getting to use the exoskeleton to climb stairs, as you said, is certainly a huge benefit for some of the — for some or all of the users. So how is that translating into potential patients trying to come in and say now that you have it, so you have everything that I want? So can I get trained? That’s sort of the conversation. How much of that is increasing? And what are your comments on that end of things.

Larry Jasinski: The specific patients, they look at it as the more they can use us the better the ones that are more favorable. And when you take away limitations, they are more favorable in the product. But I would generally say most of them are already favorable and it was a matter of finding a way to get it paid for. So the CMS and VA coverage is going to get the majority of the audience. What this will really do is make it a better product for the beneficiaries of CMS and better product for the VA, because the users will use it more, and that’s what they really want. So that is the bigger value. It takes away obstacles. But it’s generally so far taken away obstacles from people who already wanted it.

Swayampakula Ramakanth: Perfect. Thank you very much for taking all my questions.

Operator: Our next question here will come from Martin Pollack with KMTR. Please go ahead with your question.

Martin Pollack: Good morning, gentlemen. Two 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 and let’s say, you’re not on that conference call, you virtually get nothing in terms of outlook in terms of commentary that you’ve reserved for the conference call itself. In the past, you’ve actually done that, providing more clarity going through those bullet points. I don’t know what motivated you not to make any comments on that. But remember, not everybody is necessarily on this call. As we know, there’s just a few investors who come on. But that information is just not there.

So I think there’s got to be a better way to do this. If you’re going to give us information go through all these bullet points, give us a progress point. Among the things you don’t tell us is your outlook statement and 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 results here. When you say 15% to 20% year-over-year growth for second half, are we talking about actually second half off of results last year because the second half of 2022 was $3.1 million in revenues? What should we surmise about the actual outlook for second half based on what you’re saying? Are you suggesting a run rate of revenues or revenues of about $3.5 million to $4 million?

Let’s start with that first question.

Mike Lawless: Hi, Marty. This is Mike. So the 15% to 20% comment related to full year 2023 versus full year 2022. So that would imply a growth rate north of 15% to 20% for the second half, if you’re looking at second half in isolation, because we’re adding together the growth in the first half and the growth in the second half and the growth in the second half is going to be higher. So adding the two together, the growth year-over-year is — right now, based on what we’ve — our view of the outlook is 15% to 20%, excluding any impact from Medicare, which again, we can’t comment on until till such time that we have more clarity on what the status of the Medicare reimbursement is going to be.

Martin Pollack: Okay. So that actually suggests $5.5 million 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 because when one sees the revenue number, it’s back to just the kind of rate — the kind of numbers we’re seeing all over the place. Obviously, fourth quarter was very strong. Third quarter was very weak. And when you go back and forth, it seems to me, where is the transparency that could have come through in your actual detailed summary. Curious also, do you see that gross margin breaking through the 50% area with the kind of revenue run rate you expect in the second half.

Mike Lawless: So we need — I think at this stage, we need higher no, we need higher volumes to achieve that level of gross margin. We need higher revenue volumes to leverage our fixed costs to be able to reach that level.

Martin Pollack: So based on this quarter, 47% gross margin, I believe there was. 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?

Mike Lawless: I’m not guide — I’m not going to guide to margins for the year or for the second half. Right now, I’m more comfortable talking about top line. We certainly 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. So as we build that quarterly revenue volume, the margins will increase as a result of that. But until we get there, I’d rather not comment specifically on discrete levels.

Martin Pollack: With regard to the notion that you can get it to breakeven or profitability, I’m wondering if you believe that’s the case without an acquisition, a meaningful acquisition that you’re involved with. And I would like to be to make a comment about how important acquisitions are to this entire story. The adjacencies that you would expect from product extensions obviously can help. But when we’re talking about a transformational look at the company via when an acquisition can provide for you the synergies and costs and even revenues. How important is this? Because I don’t see this as a commentary that suggests this is the single most important thing outside of CMS. Where do you see that as a priority? I’m happy to hear this from both you and Larry on this question.

Larry Jasinski: Well, we’ve stated both in our objective over the past two years, the intention to add product lines in order to leverage the cost structure that we have in place and the skill sets, frankly, that we offer. So it’s very important, and it’s been a stated objective multiple times over the last two years. I think we’ve tried to update that in every quarter. I think it’s important because it makes it easier to work with our customer base. It allows us to use an infrastructure that we built with certain types of expertise, whether it be in clinical or reimbursement or other areas. So it is an important business strategy of ours that we are pursuing, but we’re pursuing it prudently. Whatever we add has got to be something that meets the criteria that we have set out as a company.

We’re not looking to add things just for the sake of adding and we’re adding something that fits strategically and will enhance the business. And I think the real value of it shortens the path to profitability because the CMS path will take some time for a market that will be meaningful. By adding additional product lines, it will shorten that time line, we believe, to profitability.

Martin Pollack: As cleared to me, I think all investors are looking at the burn rate quarter-to-quarter as that number continues. And clearly, there’s , which is to turn this company around, get the scalability on not only the exoskeleton, but also on the other products potentially. The notion that an acquisition is important. I wonder if you could just tell us, are you involved in some serious discussions with a particular acquisition target? I mean, because if you are — it’s okay to say we haven’t closed anything. We’re not there yet, but I think we need to know whether you are actually in serious discussion with any potential targets. I think as investors, we should know that, and this becomes a very critical reason why investors will say, okay, transformational position is really still part of the story. Can you tell us where you are on the acquisition front or on the acquisition hunt?

Larry Jasinski: I can tell you that we have looked at many companies and have had discussions where we believe they make sense, but I can’t comment beyond that.

Martin Pollack: Even to say that you might be in a due diligence point with any particular acquisition targets. Have you defined that target, at least is there one that you’re saying will be the first of those potential targets that you can — you’re actually in some discussions with. Clearly, I don’t expect to know that you’re going to close anything at any time, but investors who are listening to this call would want to know how far along are you in these discussions?

Larry Jasinski: We have clearly defined targets that we believe would fit well with our company, but completing a process has a lot of elements to it, and I can’t comment further than that at this point until we get past all of the stages that it requires to make that a public announcement.

Martin Pollack: Larry, last question with regard to profitability, do you see that possible, let’s say, in the next 12 to 18 months with the current business model that you have in place? I mean, is that possible? And the reason is clearly because the $4 million to $5 million of cash burn per quarter means that we’re going to run out of cash in a few years. And even as that is happening, the stock price per share is at some 40%, 50% discount to the actual net cash per share. And that to me is a concern that we’re seeing a slippery slope. We don’t know where it’s going to stop. Clearly, there is some very positive fundamentals along everything you’ve said today, I think it would have been much better if some of this was in print, but please comment on profitability. Can you be profitable without an acquisition?

Larry Jasinski: That depends on CMS. Answer that question to the extent. So there are circumstances where it certainly could be. We have developed models of what it would take to get us to profitability on our current cash that is a combination of existing products at adding products. If coverage were more favorable and more easily achieved, it could be — we’re easily done with the ReWalk product line as a standalone, but we think it’s most efficiently done by having a few product lines with the same call points, the same physician groups, but adding things that are going to be accretive in a very short cycle.

Martin Pollack: Okay. Thank you, gentlemen.

Larry Jasinski: Thanks Marty.

Mike Lawless: Thank you, Mary.

Operator: And our next question will come from Dan with NBS Investments. Please go ahead with your question.

Unidentified Analyst: Yes. Thank you for taking the call. I’d like some color on the repurchase program where it exists. You said earlier that I think in the first quarter, it was $771,000. I was wondering if that’s an inclusive number of everything that’s been repurchased on the $8 million or that’s just a quarterly figure. So could you all give us some color on that? And secondly, I know that there can’t be an active strategy. It’s based on what we do, but what’s the progress? Or is there any strategy, or is there any forward-looking on trying to increase the stock price.

Larry Jasinski: You want to start with the buyback and all.

Mike Lawless: Yeah. So this is Mike. So the $770,000 I quoted in the remarks earlier related to activity in Q1. So that was specific only to the first quarter of this year.

Unidentified Analyst: What’s the total amount then from the inception of the buyback to now. Do you have a number for that?

Mike Lawless: $3.3 million.

Unidentified Analyst: Say that again, please.

Mike Lawless: There’d be an additional $2.5 million that we repurchased before last quarter. So it will be the combination of the $770 million and the $2.5 million or $3.3 million in total.

Unidentified Analyst: Okay. And so you all are on projection in this next six-month cycle to get the rest purchased? Or is it going to take another execution of another six month turns to get it done?

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

Larry Jasinski: And I think the other half of the question is part of the answer where you asked about the price per share. And we believe that there are several things that should impact our stock price. Milestones are the biggest. The process of CMS changes this industry. And it changes this company once we cross that milestone. The addition of other product lines also would change some of the profile of our company. So the milestone components we believe are reasonably close in. But with the government, you can’t define reasonably entirely for timing, but they’re working with us. In parallel, you’ve seen a change in investment and time and money and talent for Investor Relations. And we believe that will help us bring in higher volumes and more investors built around the milestones and the long-term path that we have.

We are very aggressively in both of those areas using them as a vehicle to improve the price per share if we can achieve these milestones and communicate it well.

Unidentified Analyst: I appreciate that because as a long-term investor, I believe strongly in the product and I’m pretty much all in on it. We are. And I just — I’m interested in that idea of a better flow of information is hard to come by. So any efforts you could put into Investor Relations and a better free flow of information would be highly appreciated. And I’ll leave it with that. Thank you very much.

Larry Jasinski: Thank you. And with the addition of LifeSci Advisors, I think they will help us a great deal as they do this with many companies. And then also Mike and I do our best to respond to every investor when they have questions. We obviously stay with only public information, but we’re glad to take calls or emails or text at any time.

Unidentified Analyst: Thank you.

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

End of Q&A:

Larry Jasinski: Okay. I would like to thank everybody for the participation. And I think the question asked at the beginning around CMS expansion and our confidence in where this is going, very clearly, this product works. Our data is there, and we see the market reacting to it slowly, but reacting to it. CMS has taken this thus far. When or if and how they finish it is still to be determined. But we have come a very long way over these past six to 12 months of CMS. And that’s why you see us putting in 10 claims in Q2, and 35 to 50 for the year. Those are game changers. And I think that’s the most important thing to watch as to when and how they develop. So with that, thank you and for anybody who is looking for information, please reach to LifeSci Advisors, Mike or myself, and we will communicate everything that we can. Thank you.

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