Good morning, and welcome to the Fourth Quarter and Full Year 2023 Lifeward Earnings Conference Call. All participants will be in listen-only mode. [Operator Instructions] After today's presentation, there will be an opportunity to ask questions. [Operator Instructions] Please note this event is being recorded. I would now like to turn the conference over to Mike Lawless, CFO of Lifeward. Please go ahead.

Thank you, Drew. Good morning and welcome to Lifeward’s fourth quarter 2023 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 our financial results for the three months and full year ended December 31, 2023. 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 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 within the meaning of the Private Securities Litigation Reform Act. These forward-looking statements are based on information available to Lifeward’s management as of today and involve risks and uncertainties including the risk noted in our press release and our filings with the Securities and Exchange Commission. 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 will be available shortly after the 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 our website. For the benefit of those who may be listening to the replay or an archived webcast, this call was held and recorded on February 27, 2024. Since that date, 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 Larry.

Thank you, Mike. Good day to all. 2023 was a very successful year, achieving milestones that have set us up for exciting growth and expansion. Our investment and success in gaining Medicare payment for exoskeletons, acquisition of commercially successful and highly innovative antigravity products, the strategic building of a scalable organization with combined talent of the new entity, Lifeward, and ongoing technology leadership with new products are the key milestones of 2023. We believe 2024 is our year to capitalize on these achievements as we will move forward with our sales strategy. In addition to revenue growth, we are poised to leverage our existing operations to minimize our cost that puts us on a path to profitability in 2026. The key highlights for 2023 and the fourth quarter include a 151% increase in annual revenue to $13.9 million in 2023, a 216% increase in Q4 revenue to $6.9 million from prior year Q4. The rebranding of the company as Lifeward to reflect our vision and mission. Integration of the commercial and operational resources of the former ReWalk and AlterG businesses to unify the teams and leverage the inherent strengths of both organizations, resulting in $3 million in annual net savings to be realized in 2024. A public presentation at the November 29 HCPC session, where we stated our case for higher price reimbursement due to the advancements in technology since our original application in 2019. Importantly, we achieved a Medicare reimbursement structure for the ReWalk personal exoskeleton in 2023. We also got internal infrastructure to meet requirements to process Medicare claims. Developed and gained FDA clearance of breakthrough products for strand curve climbing technology and move forward with innovative new designs of antigravity technology to launch mid-2024 and afterwards. Now, as we turn to 2024, final pricing for our breakthrough…

Thanks, Larry. Before I review the financial results, I want to remind everyone that our fourth quarter GAAP results include various costs and expenses related to the acquisition of AlterG, which can obscure visibility to the underlying operational performance of Lifeward. In order to facilitate understanding of both the GAAP results and the operational results of Lifeward, I want to discuss our performance in the fourth quarter of 2023 on both a GAAP and non-GAAP basis, which excludes the purchase accounting adjustments, transaction expenses, restructuring charges, rebranding and integration costs, inventory charge and stock compensation expense. The reconciliation of the non-GAAP to GAAP results is provided in today's earnings release, and I encourage you to reference these tables as I discuss the financials. Moving to revenue. Lifeward reported revenue of $6.9 million in the fourth quarter of 2023 compared to $2.2 million in the fourth quarter of 2022, up $4.7 million or over 200%. The increase in revenue is attributable to the acquisition of AlterG. Excluding AlterG sales, the fourth quarter of 2023 revenue was $2.2 million, up $0.7 million sequentially from the third quarter of 2023 and in line with the $2.2 million reported in the fourth quarter of 2022. ReWalk Exoskeleton revenue in Q4 2023 was flat versus Q4 2022 on the same number of units sold, while the revenue from the sale of MyoCycle FES training cycles declined slightly, but was offset with an increase of revenue from ReStore units. Turning to our pipeline metrics. Our pace of active rentals consists of 24 cases, down two from last quarter, which is broken down with 21 in Germany and three VHA rentals. As of December 31, 2023, our overall number of ReWalk cases in process was 70 with 49 in Germany and 21 in the US. We ended…

Thank you, Mike. I would now like to provide more detail on our market goals, our ongoing technological advancements, our commercial operations, and our financial goals. First, the success of CMS is something we seek to build on in the U.S. market. We will work with CMS to optimize the submission process. In parallel, we will initiate interaction with U.S. private commercial payers and Workers Compensation groups to seek similar coverage as provided by CMS. These processes are a multiyear approach and we will update accordingly as they progress. Technology advancement is central to our mission and to our growth expectations. Midyear, we plan to launch a new AlterG anti-gravity model, which has features and pricing specifically designed to address the needs of smaller clinics who have previously been unable to access anti-gravity technology as a treatment option for the patients due to limited budgets and other constraints. We see this as an underserved market with this design can advance penetration for these smaller clinics. We have also progressed on technology that expands clinical applications with new features for larger VM Centers. We have not yet established a specific launch date for this product but seek to launch in 2025. The ReWalk Personal Exoskeleton product line will soon be filing an FDA submission for a new iteration of the ReWalk design. It is part of the constant advancement of adding new features and improvements from our extensive interaction with our users. The timing for this launch will be defined by the FDA clearance, and we are hopeful this launch will be able to occur in 2024. In addition, separate efforts are being made to establish our longer-term pipeline for advancements with exoskeletons, and we have incorporated artificial intelligence or AI into a functional prototype to improve usability and add new…

Yes. We will now begin the question-and-answer session. [Operator Instructions] The first question comes from Swayampakula Ramakanth with H.C. Wainwright. Please go ahead.

Thank you. This is RK from H.C. Wainwright. Good morning, Larry and Mike, so a few questions for me. Just to start off on the CMS reimbursement, is I mean, I initially thought that some -- by the time -- by the end of this month, we should have something in place. Is that still the expectation? And what sort of communications are you having currently with CMS to ensure yourself that we'll have everything in place for April 1 for it to be effective April 1?

The -- our expectation is consistent in that we are expecting the rules to take place on April 1, as it always has. We recognize with CMS that there were more than 30 categories of products in the fixed suit [ph] meeting, and we were one of those. So I think they have a lot of detailed answer to get all of the categories done even though most of them have nothing to do with us. We're just a part of an overall package. So our confidence is very high. April 1 is our effective date. The timing, we also had expected it by now, and we anticipate it any day in order for the Max to have time to implement the fee schedule into their systems. But I don't have it as of this call. But as soon as they do, you're going to see our press release.

Thanks for that. And then I think at the end of last year, you got -- you submitted or you successfully got the site submission done to one of the Max, and that actually gave us an indication of how you have set up your systems and they're going smooth. So beyond that, have there been any submissions between then and now? Are you holding up all your submissions until you get the final ruling?

No, we continued and restarted submissions on January 1, when it switched over to a lump sum payment. So we did put them on hold in the latter part of Q4. And we will finish the end of February with a total. This will include the earlier ones of about 35 submissions in, roughly half of them here in the first part of this year, the other half were from last year. And again, our timing was simply now we know at least all the later ones are under lump sum payment designation. And we will continue to build our pipeline to try to put in roughly 60 to 75 additional submissions this year.

Okay. Thank you. And then I want to – what commentary you have in terms of growth expectations in Germany and Europe in general, I did hear on the call, you were saying that you have about 18 or 19 sales folks out there – distributors out there. So how are they helping you to grow the business in Europe?

Well, one of the primary advantages of the addition of the AlterG technologies is it built our network in Europe and Asia that we didn't have. So for the AlterG product line, now that they are fully focused on the field and no longer involved with this elements of the sale on acquisition. We expect that they are going to see reasonably good growth in the European and Asian markets through the size and scope of their distribution organization. For our direct team in Germany, we're optimistic on both sides that the AlterG will continue to do well in Germany. It's been a very well-accepted product there. And we see the extra seltor market beginning to grow in Germany as well as we see an increase of up to 50% year-over-year in Germany.

Perfect. So my last set of questions on AlterG, in general, what is the revenue dynamics as we go through the year? And then for the new product that you're planning to launch in mid-2024, what sort of a market is out there for that product? Thanks.

Mike, I'd ask you to start with the trends.

Yeah. So we expect that the sales of the AlterG systems will grow sequentially as we move through the year. That's typically been the historical pattern for that business, whereas the Q1 is the lowest quarter, and then it gradually builds as we move through the year. I guess that's a function of the order patterns and the purchasing patterns of the customer base. But I think that will be particularly true this year because of the fact that the introduction of the new NPI right around midyear when we're expecting that. So the second half of the year, we'll get the benefit of that new product introduction in addition to the normal seasonal growth that we typically see with that product line.

Okay. And regarding the new product, I'll step back for a second and remind you the ones that we're doing so well with AlterG and entering a new segment is what we're excited about. But the product is extremely well accepted in the professional sports arena, and we expect that business to stay very steady. And we also have a healthy business in the larger rehab clinics. The area we've not been able to penetrate heavily is the smaller private practice places because the features of the products we build into the pro sports, for example, are for 300-pound people that might run 15 miles an hour in the larger rehab clinics, we have a lot of other features and capability. But the smaller private practices don't need that level of capability. They're not trading pro athletes. They can really work well with the audience. So we have built the features around something that will allow us to begin to penetrate that segment, which is about 15,000 clinics in the US that is, at this point, really not penetrated. So it's rounding out us in all of the major markets where this technology can be used. So we're excited about it this year. We'll begin shipping this product right around midyear, and it is a significant part of our growth and trajectory for AlterG.

Thanks. Thank you very much for taking my questions. Good luck.

[Operator Instructions] The next question comes from Ben Haynor with Alliance Global Partners. Please go ahead.

Good day, gentlemen. Thanks for taking the questions. Can you hear me, okay?

Yes, yes, Ben.

Yes.

Great. Just wanted to check on the guidance for -- how much CMS revenue is included in that? I mean just kind of back of the envelope, if I look at it and say you've got 35 submissions in that you could get paid four or you got the $60 million to $75 million that you plan to put in this year, even at the preliminary figure that could be high single-digit millions or even low double-digit millions. What's the right way to think about that? And then I assume any CMS revenue that you do have in there is the preliminary slated model to be reimbursed at the preliminary reimbursement figure that's out there.

Hi, Ben, it's Larry. Yes, we have presently modeled this using a combination of our submissions we're making and the preliminary pricing, although, we think that will be higher. So we have the 110 claims total. So, the 35 already in place, the 75 new ones, so that's our goal, 60 to 75, but we expect around 100 or more claims or submissions. The percentage that we are looking for payment for 2024, the reason we gave a range is somewhere between 10% and about 40%, we think, will be paid in 2024 calendar year, and we believe the balance will be paid in the 2025 period. So this is partially building our pipeline for 2025. We're being conservative in our estimates because we can't completely predict the pace of things with CMS, and that's how we built that.

So there's upside if they hit that 10% to 40% proportion is higher, and obviously, if the reimbursement figure is higher, is that fair?

Yes, we'll take the sale whenever we can get it. So, yes.

Okay. Fair enough. And then you mentioned kind of refocusing or focusing the sales force more on physician referrals. Can you kind of walk us through a typical patient journey as it stands today to get to a personal home unit and then how that might change over the course of this year as CMS changes take effect?

Well, the definition and activities of CMS will help us a lot. I'll kind of look backwards. Most of our work over the past few years has been very patient driven. We would have a patient and help qualify that patient with our clinical team and then help them through the system. But our referrals really came from patients that really just necessarily wanted the benefits of this technology. The physician community was not really willing to advance this, because they didn't want to give false hope to patients that there was no coverage, they really wouldn't push us with the patient community. So our change in profile to a physician-focused approach a little bit here is because it's more scalable and will help us get to the right patients. Our success rate from a patient referred group of individuals is dramatically higher than the individuals who come to us just individually because they could qualify a lot better. So for a patient's journey right now, we would encourage and educate them to ask their position, have their position guide them through the inclusion exclusion criteria and then hand them off to our customer service team, which has all the elements that we know we need for a CMS submission, and we help pull that together and get the submission with our internal teams. And then we work back to the clinic that we originally got the position or the referral came from, and we will do the training there in most cases. And then the product is provided at the end of that cycle. So it's a combination now of the physician as a starting point for many of them followed by ReWalk's involvement in helping the hard work of processing and preparing a claim that will move through followed by the clinic training them. And then after that, we have a very good warranty and service program here to make sure these individuals have a device working for the entire five-year life of the device. So there's -- the flow chart is much longer than that, but that is a reasonably good verbal explanation. Q – Ben Haynor: No, and that makes sense, and it's definitely helpful. And our -- obviously, with the patients coming to use kind of the way that's been historically, obviously, you're never going to run Super Bowl ads to try and target all the patients could potentially be candidates. But in terms of the physicians that you go after, I mean, is that a relatively smaller group of folks that might be X thousand out there that you can easily target? Or is there sort of a back of the envelope number that we should think about on these -- your sales force will be going after 2,000 or 10,000 or 500 physicians that really you guys think have the potential like -- to write excuse me, a lot of prescriptions.

There's a -- Yes, there's a pretty good variety of the physician base. The core initial one is the PM&R docs, the people who do physical and rehabilitation medicine. As they see these patients, particularly early -- as patients get a little later in years past, their injury, the group becomes more varied with neurologists and internist. So our initial focus would be a little more in the clinic based, and we believe that gives us sufficient numbers for growth. But over time, getting neurologists and some internal medicine -- the group's education will matter. So I think we have a pretty good early target. It will grow overtime for the Spinal Cord Injury type of business.

Okay. Got it. That's helpful. And then a couple of quick ones on -- can you provide the pro forma AlterG revenues for 2023 and the growth versus 2022? Or do you have those available or to provide them?

The pro forma revenue, if you combine the two organizations together...

Well, either that way or just AlterG is kind of a standalone, if you will.

I don't have that in my fingers just let me try and pull that up while we're on the call here.

Okay.

Give me a moment...

Yeah. No. No problem. And then just on -- I guess another one to distract you from the test. But the integration savings that you expect does that kind of kick in fully during Q1? Or does that ramp down into Q2 and beyond? Or should we just model it as kind of $750,000 savings over a quarter or over the course of the year?

That will phase in overtime. That's not all immediate. We should start to see the benefit of that in Q1, but we won't really see the full impact until we move later through the year.

Okay. That’s helpful. And …

… for the time to kick in.

Makes sense. Okay. I think that's all I have. I'll leave at that and thanks for taking my questions guys.

Thanks, Ben.

Thank you, Ben. I'll follow-up with you, with the answer to that other question that you had.

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

I'd like to thank everyone for joining us today. I started out with a fairly long list of 2023 milestones. And we've very much been a milestone-driven company, because that was the basis for us to really expand and this is the year we get to do it, that we are moving to execution phase. We have the right team in place, which is an important part of the integration of the companies. And we have the size and scale to do it. So we very much look forward to presenting us on future quarterly calls. And we ask everyone to please watch us closely. That's it for today. Thank you everybody.

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