Good day, ladies and gentlemen, and welcome to the First Quarter 2019 ReWalk Robotics Ltd. Earnings Conference Call. [Operator Instructions]. As a reminder, this conference call is being recorded. I would now like to introduce your host for today's call, Mr. Ori Gon, Chief Financial Officer. Sir, you may begin.

Thank you, Lorinda. Good morning, and welcome to ReWalk Robotics' First Quarter 2019 Earnings Call. This is Ori Gon, ReWalk's CFO. With me on today's call is Larry Jasinski, Chief Executive Officer of ReWalk. This morning, the company issued a press release detailing financial results for the three months ended March 31, 2019. This press release and a webcast of this call can be accessed through the Investor Relations section of the ReWalk website at www.rewalk.com. Before we get started, I would like to remind everyone that any statements made on today's conference call that express a belief, expectation, projection, forecast, anticipation or intent regarding future events and the company's future performance may be considered forward-looking statements as defined by the Private Securities Litigation Reform Act. These forward-looking statements are based on information available to ReWalk management as of today and involve risks and uncertainties, including those noted in this morning's press release and ReWalk's filings with the SEC. Such forward-looking statements are not guarantees of future performance. Actual results may differ materially from those projected in the forward-looking statements. ReWalk specifically disclaims any intent or obligation to update these forward-looking statements, except as required by law. A telephone replay of the call will be available shortly after completion of this call. You will find the dial-in information in today's press release. The archived webcast will be available for 1 year on the company's website at www.rewalk.com. For the benefit of those who may be listening to the replay or archived webcast, this call was held and recorded on May 7, 2019. Since then, ReWalk may have made announcements related to the topics discussed, so please reference the company's most recent press releases and SEC filings. And with that, I'll turn the call over to ReWalk's CEO, Larry Jasinski.

Thank you, Ori. Good morning, everyone, and thank you for joining us. We are very satisfied with our Q1 progress as we have had successful execution with each aspect of our key strategic activities to build a sustainable and valued business enterprise. They include, one, overall sales results; two, market support in terms of reimbursement or payment for personal spinal cord injury systems in Germany, the U.S. and the U.K.; three, progress and preparation for entry into a major new market for stroke rehab; four, our financial strategy obtaining adequate cash for 2019 and beyond along with stabilizing our position with our NASDAQ listing; five, building the path for leveraging operations with multiple revenue streams in parallel with reduced expenses after our successful development efforts of the past 3 years. So let's start with a more detailed examination of each of these 5 elements in Q1, starting with our Q1 2019 results. The EU has become predictable with strong quarterly sales that specifically tie to the achievement of a coverage code. The results of Q4 2018 were repeated in Q1 by additional approved trainings that lead to predictable sales occurred to support Q2 and Q3 sales. In the EU, we have revenue of $1.1 million and a strong pipeline of approved trials, which includes 7 opportunities in trial as of March 31 and 9 cases that have completed their trial period and are pending insurance closures. Our second major thrust has been with insurance coverage. With the multiple changes in coverage over the past 12 months and the resulting clinical successes as a baseline, we are now in the process of establishing direct insurance contracts with multiple statutory health insurance groups covering 34 million lives in Germany as well, with the head office of Workmen's Compensation, insurance covering 64 million…

Thanks, Larry. I would like to start with a summary of our top line results. Q1 revenue was $1.6 million. This reflects placement of 14 units during the quarter. 10 units were placed in Europe, three were placed in the U.S. and 1 unit was placed in other markets. During the quarter, we had seven new rental purchase units placed, out of which, two have completed the trial period and were converted within the quarter. We also had five previously rented units convert to purchase. At the end of the quarter, we had 18 open trials including 8 active rentals and 10 claims that have completed their trial period and are awaiting a final insurance decision. We also had 186 pending insurance claims relating to coverage for ReWalk. This represents approximately $18 million in potential revenue. Let's turn now to our gross margin. Our Q1 2019 gross margin was 59% compared to 43% in the prior year quarter. This increase is mainly due to our improved average selling price across all regions with all of our units sold this quarter coming from direct insurance. Regarding our operating expenses. Q1 2019 OpEx decreased to $4.5 million compared to $6.5 million in the prior year period. This improvement is driven mainly by reduced personnel and personnel-related expenses as well as reduced staff consultants and R&D material, which was consumed in the beginning of 2018 as part of the ReStore development process. Regarding our operating cash burn. We see that the first quarter of 2019 had a $4.1 million operating cash burn compared to $5 million in the prior year quarter. This quarter, we have also reduced our loan repayment by $0.5 million compared to prior year quarter due to our November 2018 agreement with Kreos to defer 50% of our 2019 capital payment into 2020 and until the first quarter of 2021. Our net loss for the first quarter was $4 million compared to a net loss of $6.3 million in the first quarter of 2018. Our non-GAAP net loss for the first quarter of 2019 was $3.6 million compared to a non-GAAP net loss of $5.4 million in the prior year quarter. Turning to our balance sheet. The 2 separate fundraising events that we have closed in 2019 strengthened our balance sheet and allowed us, together with the reverse split, to regain our NASDAQ compliance. We are working based on a defined plan to maintain our listing throughout 2019 and beyond. Our cash balance as of March 31, 2019, was $8.9 million. Our March 31, 2019, cash balance on a pro forma basis, which includes the equity rate completed on April 5, was $12.6 million. With that, I'd like to turn the call back to Larry for some final remarks.

Thanks, Ori. As we completed our prior quarterly review, I have laid out 8 key 2019 objectives and priorities for us. I'd like to cover the progress with each of these. So for the first one. Completion of the submission for our 510(k)-supported FDA clearance of the ReStore exosuit. Well, the status, done. We submitted it on February 14, 2019. The second one, prepare for the EU launch of the ReStore in mid-2019 if CE clearance is granted. We discussed the review of our submission with the government authorities during March and answered all open questions within a few days of that discussion. We anticipate a clearance in Q2. As a result, we have trained our German team in April and have begun teaching customers about ReStore. Status, on target. Third, prepare for the U.S. launch of ReStore in late Q2 or Q3 if FDA clearance is granted. While we have entered an interactive review process with the FDA regarding our submission and have elected to train our U.S. team in May. We also worked with 3 sides for continuing studies regarding this unique system that will provide additional data to the marketplace. Status, on target. Fourth, support the demand from German reimbursement with SCI sales in Germany. We have now expanded direct contact discussions with the major groups in procuring products over the last 6 months. These will be completed with the key groups in 2019 and shorten the overall time cycle for those that are seeking to walk again. Status, contracts, expected in 2019. Fifth, continued support of the U.S. VA and ongoing engagement with national and regional U.S. insurers to support broader reimbursement coverage. The VA continues to perform well with a randomized study on the ReWalk. They remain on target with 114 patients now enrolled out…

[Operator Instructions]. Our first question comes from S. Ramakanth from H.C. Wainwright.

Congratulations on first quarter. Certainly a lot of things moving in the right direction. So just to start off in terms of units placed, certainly it's encouraging that you're placing more personnel. If you just go by numbers, they're less compared to the previous period. Is that basically because you are not placing as many rehabilitation units for the SCI and you're trying to do -- trying to get more into the personal market other than the rehabilitation market?

No. Ori will answer. Ori, go first.

Yes. So I think first quarter 2018 we still had some order for the VA corp study that we got, so that was at least -- we still had some of them in 2018. We have completed, I would say, the material part of those orders and maybe in the future, we'll have some or not depending on the study progress. But that's the main difference to Q1 2019. That's it for me. Larry?

Yes. I would say from a market point of view, the number of training centers that are in place in our key areas where we have insurance, specifically Germany, United States and U.K., to the -- for the groups are sufficient. So at this point, our focus is more on the personal, which is by far the larger market. And as we solve the reimbursement piece, we believe that will be the area of growth. Our rehab center side is much more on the stroke product, which we're very close to, but you'll see those units as soon as we can give them to you.

No. Perfect. I'm just confirming my thoughts. That's good. In terms of the ReWalk Personal signal, which is again encouraging that they decided to remove the experimental designation and start a case-by-case approval. And also we have seen 1 case approval beyond -- after that reversal. I know you stated broadly that you're expecting other private payers also to come forward. Could you give us some color as to where discussions are with the other payers? And is this the normal -- is this the way it's going to be in the sense payers are going to rolling it into case by case initially and based on their own experience and data that comes out safe on the VA, it would be converted into not case by case, but a regular reimbursement situation? I'm just trying to understand the dynamics of how that is going to work out from here in the U.S. for the ReWalk Personal.

Okay. Well, for the U.S., I think the model might be similar to Germany at the end of the day. But what we've done in the U.S. first is the data continues to expand from different publications. Ideally longer term, a large scale randomized study independently contacted by the United States government is going to be incredibly valuable to us, but that study still has a year to run. So we believe in the current year, what we'll see is we have given the same type of data and submission updates to other top 5 insurers, particularly after the Cigna change. So it is ongoing review. I can't forecast what they will be specifically doing, but they're well aware of the decisions made in the new data and expanding data that's come out there. And I do believe to your comment, some may -- to separate approach, case by case may be a common starting point leading to a contracted approach later, which is what we're seeing in Germany.

Okay. That's great. And then regarding the VA study itself, how will the share of flow be? Either -- is it all different? Obviously, it's different on how VA wants to do it. But is there any say on your part regarding how the data will be released? And in addition to that, will there be any additional data present or any contrast or any other place so that we can have a look at how the device is helping our patients just so that we have an understanding of what the private payers are looking at?

Yes. First, the VA, this is an independent study funded solely by the United States government, so we have no involvement or control other than the supply of the systems and the training and the service. So when they choose and how they choose to publish is up to them. I would say several of our key presentations, which support coverage already came out of the VA because their data is -- that preceded the randomized study was quite strong and frankly, the strongest single base of data in the world today. The study we, again, have no visibility, but it is reasonable to assume that it will have similar data as the prior just given the pure numbers. But we do not have access to the data, so I can't answer that. Relative to additional data outside of the VA, there is growing data from other sources, in particular, there's a European database that has been started that we'll be publishing, and we as a company will also continue to bring more data into the market in some efforts we're doing through our post-market efforts with the FDA. So there's additional data sources beyond the VA, but the VA can afford one bigger than anybody else in terms of what they've invested in this study.

And regarding your interactions with the FDA for the ReStore product. From your comments, it looks things are going in the right direction again. How -- is there any additional color you can give us, especially regarding the FDA where timing is a little bit more predictable than the CE mark. How confident are you about that the CE mark should be available this quarter as you're seeing and -- with the FDA within 1 quarter or 2 based on your interactions so far, both either verbally or through sending back answers to their questions?

Well, first, we felt particularly good about our submissions in both the CE and U.S. market, and our clinical study results were also done by really the leading centers in the U.S. with results that we felt quite good about. But I think the important measurement to confidence is while we're confident in our studies, probably what's more important is what kind of questions they ask us. And we have now been through both with the CE and with the FDA have had interaction in terms of informal questions. And based on those questions, that's part of why we've decided to create our sales force and go forward with production. I can't give you specific timing, weeks or days or months, but every indication as we trade it wide out as we'll be launching the product here in Q2 and Q3, and I can't predict government's more than that though, I'm afraid. Sorry.

Yes. I think we'll be doing -- it will be amazing if you can actually predict the governments and the courts. In terms of commercial structure and developing the commercial structure, both in Germany, and I'm trying to initiate the process here in the U.S., you stated certain things in Germany. So how should we think about this? And how does it impact your expenses on the SG&A line from here to the end of the year as you're trying to do things in anticipation of launches, both in Germany and in the U.S. or the rest of the world?

And Ori and I can both answer this. I'll just start with just the personnel. And the call point is the same, so the clinic that we normally are working through with our ReWalk spinal cord injury product is the same one we're going in with the ReStore. So we can use the same sales rep. Most of our sales reps have an extensive background as a PT or in the industry. So it's a good cause, same trainer, same service person. So I don't have to add anybody to do the product launch. It's probably most important. Ori, you want to talk about it more of the financial structure and how we try to manage because some other things we don't have to pay for such as clinical trials and the restoring further and things of that type.

Yes. So no problem. So I think that in general, we anticipate, say, a minimum or in area of 10% operating expense decrease. We've -- and this is our target in 2019 compared to 2018. I think that while some adjustments that we've made were not specific into some region or to some department, we just are refocusing some of our efforts that are more closer to the new product for the ReStore. But all together, it's in the area of 10%. Some of it is just because we end -- we anticipate to end our regulatory and R&D activities for the ReStore, so.

[Operator Instructions]. I'm showing no further questions at this time. I'd now like to turn the call over to Larry Jasinski for closing remarks.

Thank you very much, operator. Everybody, we appreciate your time on today's call. And if you have further questions, please reach to the company through Ori or I. So have a good day. Thank you very much.

Ladies and gentlemen, thank you for participating in today's conference. This concludes the program. You may disconnect and have a wonderful day.