Lifeward Ltd. (LFWD) Earnings Call Transcript & Summary

Good day, and welcome to the ReWalk Robotics Medicare Proposal to Establish Personal Exoskeletons within a Benefit Category for Eligible Beneficiaries Conference Call. [Operator Instructions] Please note today's event is being recorded. I would now like to turn the conference over to Mike Lawless, Chief Financial Officer. Please go ahead, sir.

Thank you, Rocco. Good morning, and welcome to our conference call to discuss the recent CMS proposal to establish personal exoskeletons within a Medicare benefit category. I'm Mike Lawless, ReWalk Robotics' Chief Financial Officer. And with me on today's call is Larry Jasinski, ReWalk's Chief Executive Officer; Jeannine Lynch, ReWalk's Vice President, Strategy and Market Access; and Ashley Barnes, an advocate for the spinal cord injured community and a ReWalk user. 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 ReWalk management as of today and involve risks and uncertainties, including those noted in our press release in ReWalk's 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. 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 the completion of the call accessible from the dial-in information in last week'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 July 11, 2023. Since that date, ReWalk may have made subsequent announcements related to 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 morning. I appreciate the time invested for everyone attending today or subsequently listening. The purpose of today's call and the question-and-answer session is to comment on the magnitude of the recent proposal from the Center for Medicare & Medicaid Services or CMS to formally include personal exoskeletons as a covered item within the Brace Benefit category. Once finalized, this proposed rule would establish a clear benefit category for personal exoskeletons and would be a significant step towards improving access to exoskeleton technologies for eligible individuals within the spinal cord injured community. We appreciate and support these efforts by CMS. CMS states 6 strategic pillars: advancing equity, expanding access, engaging partners, driving innovation, protecting program sustainability and fostering excellence. Including personal exoskeletons in the brace benefit category is entirely aligned with their strategic plan. For example, under advancing equity, these innovative technologies are currently only available to veterans who have been able to access an exoskeleton through the Veterans Administration or the VA and by those few individuals who have the means to self fund. This proposed rule removes that limitation for Medicare beneficiaries. Additionally, much of the innovation in this industry to-date has been developed at risk from ReWalk's first de novo FDA approval to its recent FDA breakthrough device designation and the subsequent clearance for stair and curb functionality. The creation of a clear payment pathway would certainly encourage additional innovations that could further the life change and benefits of exoskeleton technology in alignment with the fourth strategic pillar. So before I move over with our company-specific comments, let me publicly thank CMS for the thoughtful manner in which they have listened to our concerns and the proposal they have put forward to pave a clear pathway for [indiscernible] access to exoskeleton technologies. Now I wish to provide high-level comments on the impact of this proposed rule. It is important because it greatly clarifies Medicare coverage and payment for exoskeletons. Coverage of exoskeletons in the benefit brace category would mean that the method of payment that applies to braces would apply to exoskeletons. ReWalk's VP of Strategy and Market Access, Jeannine Lynch will go into more detail on the timeline and process later in this call. In parallel to our efforts at the national policy level, ReWalk has invested in and built a team with extensive experience in establishing operational efficiency to submit claims on a case-by-case basis why the proposed rule is being finalized. We have met our operational goal in Q2 of submitting claims. With the infrastructure now in place, we are poised to execute to deliver on our 2023 goals. I would now like to provide a perspective of a longtime activist who has advocated for the spinal cord injured community for many years. Her name is Ashley Barnes. Ashley?

Thank you, Larry. Spinal cord injuries often happen suddenly from a range of events such as car and workplace accidents, forced injury, violence or adverse surgical event. It can happen to anyone, no matter their race, gender or social status as it does not discriminate. In 2014, my life changed when I suddenly lost the ability to walk after a botched spinal procedure let me paralyzed from the waist down. After my injury, I was determined to keep moving and continue living an active mobile lifestyle. That determination was driven by me being a single mom raising a special means son. I did not have time to stop moving. My interest and dreams continued the same as they did before my paralysis. After coming across an exoskeleton, I ultimately knew I needed to find a way to own my own so I could keep moving and walking. Through my dogged persistence and a 3-year battle to get my insurer to pay for my own exoskeleton I prevailed because I would not give up and accept no for an answer. Once I started walking in the device, I was shocked to discover tremendous changes in my health and quality of life due to many medical benefits I gained while using the exoskeleton. I was able to stop all narcotic pain medications and stop all specificity medications, which allowed me to regain my clarity of thought and quality of life, among other medical benefits. It simply is a life-changing technology, not just a way to walk again. But I'm not here on today's call for my story. I'm an advocate for the spinal cord injured community, my peers. So I'm here to share why this proposed rule can be so impactful for individuals living with an SCI. As is the case for people living with any chronic conditions, there is a desire to meet and learn from others who have similar lived experiences. Therefore, I have a passion to stay connected to others living with an SCI through social media, advocacy groups and directly with many of my peers. I'm also involved in a number of SCI research efforts, including working with the spinal cord injury model systems. Through those interactions, I have spoken with many of my peers across the nation, and I find that it is culturally believed in our community that Medicare does not cover personal exoskeleton. Medical providers telling the same thing. They hesitate to recommend exoskeletons to their patients with Medicare coverage because even the doctors believe it will be years before Medicare covers this type of technology. That is why this clarification from CMS is such a big deal for individuals living with the SCI community who have Medicare coverage and not the majority and for companies like ReWalk Robotics. If CMS finalizes this proposed rule, my peers and the healthcare providers who treat and invite them will be able to have hope and confidence that Medicare has implemented a pathway for qualified individuals to receive an exoskeleton and experience the benefits of walking again. Not only is this the right thing to do, but it provides an access pathway for us living with an SCI, the right to walk again. As an advocate on behalf of the SCI community, we applaud CMS on taking this step towards inclusion for newer technologies and power devices by assigning it to the braced category.

Thank you, Ashley. Part of this journey required a prominent level of experienced talent with a track record of success. Jeannine Lynch joined our company just under 2 years ago and has been the lead architect of this path to establish access for those who need it. I have asked her to provide more detail on where we are and what is ahead of us. Jeannine?

Thank you, Larry. Expediting payment and coverage for innovative technologies like the ReWalk Exoskeleton has the power to be life-changing for eligible Medicare beneficiaries with spinal cord injury. In this section, I will cover highlights of the current proposed rule, the next steps for a payment determination and to provide a longer-term outlook for claims. The proposed rule is important because Medicare requires all covered items to fall within a benefit category for coverage and payment to be available. To-date, exoskeletons have not been formally included in a benefit category by CMS and the Medicare Administrative Contractors, MAC did not know how to categorize exoskeleton claims. As an overview in the proposed rule, CMS has elected to define the benefit category of braces in regulation and to state clearly that exoskeleton fall within this benefit category. In particular, when this rule is finalized, the braces benefit category will include K1007, the code, which describes the ReWalk personal exoskeleton. The proposed rule for the brace benefit category is now in a 60-day public comment period. ReWalk supports the proposed rule and will provide comments on it. A final rule would follow and is expected to be effective starting January 2024. If the device is in the brace benefit category, Medicare payment is expected to be determined on a lump sum basis. That, in turn, should be based on the current list price, which is $186,000 for ReWalk 6.0 with stairs and curb enabled functionality. We anticipate CMS will publish a preliminary payment determination using the list price and their methodology in October-November, which will be followed by a public comment period and HCPCS meeting about a month later. Finalization of both the proposed rule and the payment determination will facilitate systematic processing of Medicare claims for a ReWalk exoskeleton for individuals who meet the medical criteria. Even before the new rule and payment determination are finalized, CMS has made clear the MAC have authority to pay the claim on a case-by-case basis. We submitted our first claim in November 2022 and 11 more in Q2 and will continue to submit claims for the remainder of 2023. ReWalk has established an infrastructure to support our ongoing Medicare claim submission and is prepared to scale consistently to meet an anticipated higher demand once CMS finalizes their proposals. For the claims and process, we anticipate a response in the coming weeks. In summary, we appreciate the collaborative effort of CMS and the MAC to establish a process that is a transparent and consistent approach to covering and paying for innovative exoskeleton technology. We agree with CMS where it is stated in the proposed rule that adding the definition of race and regulation would expedite coverage and payment for newer technology and power devices, potentially providing faster access to these new healthcare technologies for Medicare beneficiaries. ReWalk believes this is the right decision for CMS to establish a process for accessing state-of-the-art technology.

Thank you, Jeannine. I want to close with comments on what this means in terms of the market and the future of our industry. According to the National Spinal Cord Injury Statistical Center, that's NSCISC, the U.S. has a total population of approximately 300,000 spinal cord injury survivors. Once we consider eligibility criteria, including medical history and other criteria such as motivation, training requirements and companion support, we estimate an eligible population of approximately 27,000 people or roughly 9% to 10% of the prevalence pool. Estimates from NSCISC indicate that over 30% of this population has coverage through Medicare, which results in a significant pool of eligible individuals who may potentially be impacted by this proposed rule. That opens up a very sizable addressable market. If the proposal is finalized and published, we expect our placements will advance from our current level of systems per year to hundreds each year. It is too early for guidance with a specific forecast until we establish a track record under CMS procedures and with our new infrastructure. The impact of this proposed rule has potential to shape this industry across multiple timescales. First, in the short term, a clearly defined benefit category would enable greater access to personal exoskeleton technologies for medically eligible Medicare beneficiaries with spinal cord injury. Second, we anticipate that the establishment of a clear payment pathway through Medicare could open the door towards more positive coverage policies from private insurers and further increase access to these technologies for individuals with spinal cord injury outside of Medicare. Third, looking further towards the future, the structure of the proposed rule opens the door to future innovations of a similar nature, including solutions for additional patient populations such as multiple sclerosis, stroke or Parkinson's disease. We are excited about these developments and what they mean for ReWalkers, the physicians who care for these patients and ReWalk as a company. By taking uncertainty out of the process, this can be game-changing. We are optimistic that this will come to a positive closure this year. So with that, I'd like to open this up for questions for anybody in the audience.

[Operator Instructions] And today's first question comes from Swayampakula Ramakanth with H.C. Wainwright.

Good morning, Larry, and thanks for doing this call. And I really appreciate, I believe her name is [ Alison ], the patient councilor who is talking about the goods of ReWalk. Really appreciate your comments. Jeannine, talking about -- you gave some numbers specifically on the invoice price of ReWalk, I believe, about $186,000. So in your experience with the CMS, what -- how do they do these calculations because you have a different price for VA, you have this invoice price. In general, I know it's difficult to see the crystal ball. But in general, how do they do these calculations when we come up with a number?

Sure. And I appreciate the question. And you're exactly right. It is premature to speculate on pricing. So the methodology that CMS uses, they go through a number of steps. And this is outlined in the manual that they have. But in general, first, they look at the history of an item. And because there's no history with exoskeleton painted by CMS, that may not suffice. Next, if there's no fee schedule pricing then sometimes they look at a code and look at comparable items. But again, our device, de novo breakthrough, not necessarily able to do that. So what they tend to do well look at the supplier or commercial price or list price. And then from that point, we'll do some calculations internal, and then they will publish a preliminary expected payment determination, and then that will be open for public comment.

In terms of the meeting itself, I believe the HCPCS meeting normally happens in like the first or second week of November. So do you think they will come up with a -- with a proposed number before that? Because you were saying something about October-November, if that's what happens, then the HCPCS meeting would have been done by them, right? So did I get something wrong?

Well, the sequence of events that we're expecting to happen is right now, there's the published -- the proposed rule that is in a 60-day comment period, which we expect to close August 29, I believe, it is. As well, CMS will then publish a preliminary payment determination which again is open for comment in that, as you noted, that October, November timeframe. And then, if that has picked up through the CMS process, it is this November-December HCPCS meeting time frame. We do not have insight to any specifics right now. So looking at the history of CMS, that's where this information is coming from that we're waging what our expectations are.

So -- just because -- let's say, the proposal goes through and we have this under the brace category. So is it true or is it reasonable for us to think as soon as it gets under a brace category, they are -- when I say they, the CMS is forced to do some sort of reimbursement even if they can't come up with a specific number or they have to wait till the number is finalized. What I'm trying to get is like, is this going to be solved by January 1, 2024 or would this get pushed into the first meeting of HCPCS, which normally happens in May?

Yes. And it is difficult for us to read the tea leaves, and we cannot. So I can't say absolutely it will be in the November, December timeframe. It is what we're anticipating. And so we're going to actually see what CMS publishes for the agenda item, which is coming in the October-November time frame. So there is that possibility.

Okay, great. Thank you very much, Jeannine for taking all my questions and thanks Larry for doing this.

Jeannine, could you add what the expectations are for pricing in the short term with the MAC? Is that maybe the other part of the question, what will we see in the short term?

Over the short term, so our list price of $186,000, again, there is no history with comparable items. So what we're anticipating the methodology to be used is for CMS to use that supplier, manufacturer list price, do some internal calculations, and then we should get visibility into that with a proposed preliminary payment determination. Again, this is if CMS picks it up in that timeframe.

[Operator Instructions] And ladies and gentlemen, this concludes our question-and-answer session. I'd like to turn the conference back over to our presenters for any final or closing remarks.

Rocco, thank you for everyone who attend today. We very much appreciate the time and interest. We anticipate we will have further announcements as we gain more information and we will keep everyone properly informed. Otherwise, please reach to our Investor Relations group or watch for our press releases in the coming weeks. Thank you very much.

Thank you, sir. This concludes today's conference call. We thank you all for attending today's presentation. You may now disconnect your lines, and have a wonderful day. Thank you.