Executive Summary / Key Takeaways

• Lifeward (NASDAQ: LFWD) is strategically leveraging recent Medicare reimbursement for its ReWalk Personal Exoskeleton and integrating the AlterG anti-gravity business to drive revenue growth and significantly reduce operating losses.
• The company's diversified portfolio, including the recently launched ReWalk 7, AlterG NEO, and expanded MyoCycle distribution, is building sales momentum, evidenced by a growing U.S. ReWalk pipeline and sequential AlterG revenue increases.
• Aggressive cost reduction initiatives, including facility closures and headcount reductions, are expected to accelerate operating expense declines throughout 2025, complementing revenue growth.
• Management projects full-year 2025 revenue between $28 million and $30 million and anticipates achieving an adjusted operating loss of approximately $1 million by the fourth quarter of 2025, a critical step towards targeted non-GAAP operating profitability in the second half of 2026.
• Despite substantial doubt about its ability to continue as a going concern due to historical losses and current cash levels, the company is actively pursuing financing through ATM offerings and strategic partnerships while focusing on operational efficiency and improved Medicare payment predictability.

Setting the Scene: A Transformation Underway

Lifeward Ltd., formerly known as ReWalk Robotics, has embarked on a significant transformation, evolving from a company primarily focused on robotic exoskeletons for spinal cord injury (SCI) into a broader medical device entity offering life-changing solutions across the physical rehabilitation continuum. Founded in 2001, the company's initial pioneering work centered on the ReWalk Exoskeleton, a device designed to restore standing and walking capabilities to individuals with paraplegia using patented tilt-sensor technology and sophisticated motion control. This foundational technology established Lifeward's early presence in the market, primarily in the U.S. and Europe.

The strategic shift, formalized by the rebranding to Lifeward in 2024, was driven by a recognition of the need to diversify and build a more sustainable financial model. Key to this evolution was the acquisition of AlterG in August 2023, bringing patented anti-gravity technology used in a wide range of rehabilitation and athletic settings. Alongside this, the company developed the ReStore soft exo-suit for stroke rehabilitation and expanded its distribution capabilities with products like the MYOLYN MyoCycle FES cycles. This multi-product portfolio aims to address a broader market, leverage existing sales channels, and create operational synergies.

The overarching strategy is clear: capitalize on hard-won market access, particularly the recent breakthrough in Medicare reimbursement for personal exoskeletons, drive adoption of an expanded product line, and achieve profitability through a combination of revenue growth and aggressive cost management. This strategic pivot is critical for a company that has accumulated significant historical losses ($269.7 million accumulated deficit as of March 31, 2025) and faces the challenge of demonstrating a viable path to financial health.

Technological Differentiation and Innovation

At the heart of Lifeward's offering lies its differentiated technology, providing tangible benefits to users and clinicians.

The core ReWalk Exoskeleton technology utilizes a sophisticated system of tilt sensors, an on-board computer, and motion sensors to power motorized legs. This enables individuals with paraplegia to stand and walk, offering not just mobility but also documented health benefits including improved pain reduction, better bowel function, and enhanced mental health. The recent ReWalk 7 Personal Exoskeleton, cleared by the FDA in March 2025 and launched in the U.S. in April 2025, represents a significant technological advancement driven by user feedback. Key enhancements include cloud connectivity, customizable walking speeds, a new crutch control unit for easier management, and a transition to more accessible off-the-shelf batteries. While specific quantifiable improvements in energy efficiency or speed compared to previous generations were not detailed, management emphasizes these features streamline the user experience and enhance functionality in real-world environments.

The AlterG Anti-Gravity System employs patented, NASA-derived Differential Air Pressure (DAP) technology. This allows for precise, calibrated body weight support, enabling individuals to exercise or rehabilitate with reduced pain and impact. The technology's benefit lies in its ability to facilitate movement for those with injuries, neurological conditions, or obesity, accelerating recovery and improving outcomes. The new AlterG NEO model, launched mid-2024, was specifically designed with features and pricing to address the needs of smaller clinics, aiming to expand market access for this technology.

Lifeward is also exploring future innovations. The ReBoot soft exo-suit for post-stroke individuals, currently on hold but with FDA Breakthrough Device Designation, represents potential for lightweight, personal-use assistance. Furthermore, the company recently completed a research program with the Israeli Human-Robot Interaction Consortium, demonstrating a proof-of-concept prototype integrating AI and advanced sensing technologies with the ReWalk exoskeleton. The stated goal of this research is to enable autonomous decision-making to adapt to different environments and anticipate user intent, making future systems even easier and more natural to use. While specific target metrics or timelines for commercializing AI features were not provided, this initiative signals a commitment to leveraging cutting-edge technology to enhance product usability and maintain a competitive edge.

For investors, these technological differentiators are crucial as they underpin the company's value proposition and potential market adoption. The ReWalk's proven benefits and the ReWalk 7's user-centric improvements support its medical necessity argument for reimbursement. AlterG's unique DAP technology provides a distinct offering in the rehabilitation market. Continued R&D, particularly in AI integration, could enhance the competitive moat by improving device performance and user experience, potentially leading to higher demand and pricing power in the long term.

Competitive Landscape and Strategic Positioning

Lifeward operates in a competitive, albeit still developing, market for advanced rehabilitation technologies. While direct, publicly traded competitors offering a full suite of comparable products are limited, key players exist in specific segments.

In the robotic exoskeleton space for SCI and rehabilitation, Ekso Bionics (EKSO) is a notable direct competitor. While precise market share figures for this niche are not publicly detailed, industry reports suggest both companies hold significant, though not dominant, positions. EKSO also focuses on clinical and personal exoskeletons. Comparing available financial ratios, Lifeward's Gross Profit Margin (33.22% TTM) trails EKSO's (53% in 2024), suggesting EKSO may have better production cost efficiency or pricing power in its mix. However, Lifeward's strategic win on Medicare reimbursement ($91,032 lump sum) provides a significant market access advantage in the crucial U.S. market that EKSO is also pursuing. Lifeward's focus on an integrated portfolio (ReWalk, AlterG, MyoCycle) also contrasts with EKSO's more concentrated exoskeleton offering, potentially providing Lifeward with cross-selling opportunities and diversified revenue streams.

Broader medical device and robotics companies like Intuitive Surgical (ISRG) and Stryker Corporation (SYK) represent larger, financially stronger entities with interests in robotic-assisted procedures and rehabilitation devices, though their direct product overlap with Lifeward's core offerings is less pronounced. Their financial metrics (ISRG 67% Gross Margin, 28% Operating Margin; SYK 64% Gross Margin, 16% Operating Margin in 2024) highlight the scale and profitability gap Lifeward aims to close. These larger players possess significant resources for R&D, acquisitions, and market penetration, posing a long-term competitive threat if they choose to focus more heavily on Lifeward's niche.

Lifeward's strategic response to this landscape involves several key pillars:

1. Leveraging Medicare Access: The CMS reimbursement pathway is a critical differentiator, providing a clear route to payment in the largest healthcare market. The partnership with CorLife specifically targets the workers' compensation segment (6-7% of the SCI market), utilizing CorLife's established network and claims processing expertise to gain efficient access to this attractive payer group.
2. Expanding Product Portfolio: The AlterG acquisition and MyoCycle distribution expansion broaden the addressable market and create synergies. The AlterG business, despite recent softness in capital spending impacting sales, is expected to be accretive in 2025, contributing positively to the bottom line. The expanded MYOLYN partnership allows access to the larger home-use FES market, leveraging the existing ReWalk sales team's call points.
3. Operational Efficiency: By consolidating facilities and moving to contract manufacturing for AlterG, Lifeward aims to reduce production costs and improve gross margins, bringing them closer to or exceeding competitors like EKSO (2025 target adjusted gross margin 47-49%). Headcount reductions further streamline the cost structure.
4. Technological Innovation: Continuous product improvement (ReWalk 7) and exploration of future tech (AI, ReBoot) are intended to maintain a competitive edge based on performance and user experience.

While Lifeward's smaller scale and financial position (negative operating margins, significant accumulated deficit) represent vulnerabilities compared to larger players, its focused expertise, pioneering technology, and strategic market access achievements position it to compete effectively within its specific segments. The ability to execute on its cost reduction and revenue growth plans will be paramount in solidifying its competitive standing.

Financial Performance and Liquidity

Lifeward's recent financial performance reflects a company in transition, working to translate strategic achievements into improved financial results while managing significant historical losses and liquidity constraints.

For the first quarter of 2025, the company reported revenue of $5.03 million, a decrease from $5.28 million in Q1 2024. However, management clarified that the prior year included approximately $0.5 million in catch-up revenue from 2023 ReWalk rentals recognized after the Medicare rate was established. Adjusting for this, Q1 2025 revenue from underlying activity showed an increase year-over-year, driven by improved ReWalk sales to Medicare beneficiaries (over 10 units placed, a quarterly high) and 19% growth in AlterG revenue compared to Q1 2024. The net loss for the quarter was $4.83 million.

Gross profit for Q1 2025 was $2.12 million (42.2% of revenue), a notable increase from $1.40 million (26.4% of revenue) in Q1 2024. This improvement was primarily attributed to lower production costs following facility closures and the absence of AlterG intangible asset amortization. Despite this improvement, gross margin was below internal expectations due to ReWalk sales mix/volume impacting fixed overhead leverage and transitional costs for AlterG manufacturing. Operating expenses decreased to $6.98 million in Q1 2025 from $7.90 million in Q1 2024, reflecting cost savings from AlterG integration, fewer integration costs, and lower R&D spending as key development programs concluded. This led to a reduced operating loss of $4.85 million in Q1 2025, compared to $6.50 million in Q1 2024.

Liquidity remains a critical concern. As of March 31, 2025, cash and cash equivalents stood at $5.73 million. The company's operating activities consumed $5.49 million in cash during the quarter. This cash position, coupled with historical negative operating cash flows and the significant accumulated deficit, led auditors to raise substantial doubt about the company's ability to continue as a going concern.

Management is actively addressing this through a combination of operational improvements and financing efforts. Subsequent to the quarter, the company raised approximately $0.5 million through its ATM facility by May 12, 2025. This follows a $5 million registered direct offering closed in January 2025, which provided net proceeds of $4.47 million. The focus is on reducing the cash burn rate through revenue growth and cost efficiencies, prioritizing higher-margin sales opportunities, and improving the predictability of Medicare payments, which have historically faced delays due to complex claims processing. While progress is being made in collecting past Medicare receivables and establishing a faster payment cycle for new claims, the timing remains a key variable impacting future cash flows.

Outlook and Path to Profitability

Lifeward's outlook is centered on executing its Sustainable Growth Plan, aiming for significant financial improvement in 2025 as a bridge to profitability.

For the full year 2025, the company reaffirms its revenue guidance of $28 million to $30 million. This growth is expected to be driven by:

• Increased ReWalk placements, particularly with Medicare beneficiaries and through the new CorLife workers' compensation partnership.
• Continued momentum in the AlterG business, building on recent sequential growth and the market reception of the NEO product.
• Expanded sales of MyoCycle, leveraging the broader distribution rights for home use applications.

Management anticipates full-year 2025 adjusted gross margin between 47% and 49%, an improvement over recent levels, reflecting the benefits of increased volume, product mix, and manufacturing efficiencies from the move to contract manufacturing.

Operating expenses are projected to decrease significantly, with full-year non-GAAP operating expenses expected to be $22 million to $23 million, down from $27.5 million in 2024. These reductions are expected to accelerate throughout the year as cost savings initiatives, including the full impact of facility closures and headcount reductions, phase in.

The combined effect of revenue growth and declining operating expenses is expected to substantially reduce the operating loss. Management guides for a full-year non-GAAP operating loss of $7 million to $9 million in 2025. Crucially, they anticipate achieving an adjusted operating loss of approximately $1 million by the fourth quarter of 2025. This target is based on reaching a quarterly revenue run rate of roughly $10 million and realizing the planned cost structure efficiencies.

The longer-term goal is to reach non-GAAP operating profitability at some point during the second half of 2026. This requires achieving consistent quarterly revenue levels of approximately $12 million to $13 million, alongside maintaining a disciplined cost structure. The current pipeline of ReWalk leads, active rentals, and AlterG backlog, coupled with the strategic partnerships and product launches, provide the foundation for this anticipated growth.

Risks and Challenges

Despite the strategic progress and positive outlook, Lifeward faces significant risks that could impact its ability to achieve its financial goals and continue as a going concern.

The most pressing risk is the company's liquidity position and its ability to secure necessary financing. The current cash balance is insufficient to fund operations for a full year, and continued negative operating cash flow necessitates raising additional capital. While the company has recently completed offerings and has an ATM facility, there is no guarantee that sufficient funds can be raised on commercially reasonable terms, which could severely impact operations.

Execution risk is high. The successful conversion of the ReWalk pipeline into sales depends on the efficiency and predictability of the Medicare claims processing by MACs, which has historically been time-consuming. While management is working to improve this, delays could impact revenue timing and cash flow. Similarly, the growth targets for AlterG and MyoCycle rely on market adoption and the effectiveness of the expanded sales and distribution efforts.

Competitive pressures, particularly from larger, better-funded companies, could intensify. While Lifeward has technological advantages and unique market access points, maintaining these requires ongoing investment in R&D and market development.

Operational challenges, such as potential disruptions in the supply chain (including due to the conflict in Israel) or issues with the transition to contract manufacturing for AlterG, could impact production, costs, and delivery timelines.

Furthermore, the company is subject to risks related to regulatory approvals, maintaining intellectual property protection, and broader economic factors like inflation, interest rates, and trade policies.

Conclusion

Lifeward is at a pivotal juncture, actively transforming its business model and leveraging recent strategic breakthroughs to pursue a path towards financial sustainability. The establishment of Medicare reimbursement for the ReWalk Personal Exoskeleton provides a critical foundation for growth in the U.S. market, complemented by an expanded product portfolio and strategic partnerships aimed at increasing market penetration and operational efficiency. While the company faces significant financial challenges, including a going concern qualification and the need for further financing, management's clear focus on reducing operating losses, supported by aggressive cost controls and anticipated revenue growth from a strengthening pipeline, offers a tangible roadmap for improvement. The successful execution of the Sustainable Growth Plan, particularly in converting leads to sales, streamlining claims processing, and realizing cost efficiencies, will be paramount in determining whether Lifeward can navigate its liquidity challenges and achieve its target of significantly narrowing its operating loss by the end of 2025, ultimately walking towards profitability in the years ahead.