Release Date: August 15, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Revenue grew to $6.7 million in Q2, marking a 402% increase over Q2 2023.
- Record revenue with 20 ReWalk placements in the quarter.
- Received over $600,000 of Medicare receivables, indicating improved payment flow.
- Operating losses remained level year-over-year despite a larger commercial footprint.
- New product launches, including the neo antigravity model and the seventh-generation ReWalk, are expected to drive future growth.
Negative Points
- High interest rates and clinic consolidations impacted the pace of AlterG placements.
- GAAP operating expenses increased to $7.2 million in Q2 2024 from $5.7 million in Q2 2023.
- Cash usage in Q2 was $5.6 million, higher than expected.
- Significant lead times for Medicare administrative contractors to set up and begin initial claims payments.
- Inventory levels increased by $1.1 million due to supply chain concerns and preparation for new product launches.
Q & A Highlights
Q: Mike, you mentioned receiving $600,000 of receivables post-Q2. How long will it take for the remaining $2 million to be collected? Will it spill into 2025?
A: We expect the majority of the remaining receivables to be paid during the calendar year 2024, through Q3 and Q4.
Q: Regarding the AlterG business, how much of the growth is organic versus pent-up demand from the change of ownership?
A: This growth is entirely organic. Our field team has been actively working, and our backlog has increased significantly due to their efforts.
Q: How is the business progressing in Germany post-court case settlement? Are insurers responding positively?
A: Germany is having a good year, including Barmer, who was involved in the court case. We are seeing growth in both Germany and the United States.
Q: Gross margin was ahead of expectations. Were there any one-time impacts, or is this a straight improvement?
A: There were no one-time items. The improvement is due to higher volumes, particularly on the AlterG side, which allowed us to leverage production costs more effectively.
Q: Should we expect gross margin to continue improving through the year?
A: Yes, we expect gross margins to reach approximately 50% by Q4, driven by higher revenue and the launch of new products.
Q: What should we expect for R&D expenses now that the seventh-generation ReWalk and neo have been launched?
A: R&D expenses should be roughly flat or slightly down over the next couple of quarters relative to Q2 levels.
Q: Can you share more about the early reaction to the neo launch?
A: The reaction has been positive. We sold a model right on the floor at the trade show, and early results are resonating as intended.
Q: What are the enhancements in the seventh-generation ReWalk?
A: The new design includes user-requested features like multiple speeds, off-the-shelf battery systems, and data connectivity through a smartwatch, enhancing user experience and communication.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
