Lifeward Ltd. (LFWD) Earnings Call Transcript & Summary

Good day, and welcome to the ReWalk -- to ReWalk's conference call to discuss Medicare preliminary payment determination. [Operator Instructions] Please note, this event is being recorded. I would now like to turn the conference over to Mike Lawless, CFO of ReWalk Robotics. Please go ahead.

Thank you, Drew. Good morning, and welcome to ReWalk Robotics' conference call to discuss Medicare's preliminary payment determination for the ReWalk Personal Exoskeleton. I'm Mike Lawless, ReWalk Robotics' Chief Financial Officer. And with me on today's call is Larry Jasinski, Chief Executive Officer; and Jeannine Lynch, Vice President of Market Access and Strategy. On November 6, ReWalk issued a press release announcing that the Centers for Medicare & Medicaid Services or CMS has included the ReWalk Personal Exoskeleton system in the agenda for the upcoming Healthcare Common Procedure Coding System or HCPCS meeting on November 29, 2023, and provided a preliminary payment determination for the ReWalk Robotics personal exoskeleton system. The press release and a webcast of this call can be accessed through the Investor Relations section of the ReWalk website at 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 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 on November 6 and ReWalk's filings with the U.S. 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 today'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 on -- to the replay or the archived webcast, this call was held and recorded on November 8, 2023. Since that date, ReWalk 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. With that, I'll turn the call over to ReWalk's CEO, Larry Jasinski. Go ahead, Larry.

Thank you, Mike. Welcome, everyone. Our press release is issued on November 2 and November 6, 2023, and this call are to discuss 2 recent historic achievements for the provision of exoskeletons to Medicare beneficiaries. With the finalization of its 2024 Home Health Rule, the Centers for Medicare & Medicaid Services or CMS has confirmed a medical benefit category for personal exoskeletons. Further, with the publication of the agenda for the upcoming November 29 Healthcare Common Procedure Coding System or HCPCS meeting, CMS has, for the first time, provided a preliminary payment rate for exoskeletons and included an agenda item to discuss the pricing for the ReWalk Personal Prosthetic Exoskeleton system. The combination of these 2 events serves to bolster access to life-changing exoskeleton technology for paralyzed individuals enabling the stand, walk or ascend or descend stairs in everyday environments. The CMS engagement process, initiated by ReWalk in 2020, achieved a new code for exoskeletons as of October 1, 2020; a final rule for brace benefit category effective as of January 1, 2024; and our application has now gained preliminary pricing consideration in the upcoming HCPCS meeting on November 29, which is expected to lead to final pricing that will go into effect April 1, 2024. This process started approximately 4 years ago once the supporting scientific data on the benefits of walking expanded and was widely published. Today, I'd like to discuss the pricing within the November 29 HCPCS agenda. Specific ethical developments that will be considered as the preliminary pricing is reexamined in light of these current commercial innovations and the basic operational efforts for supply in 2024 and beyond. The preliminary payment determination was made by CMS through a gap-filling process in light of CMS' determining that lower extremity exoskeletons incorporate revolutionary features that cannot be described by any existing codes. For its gap-filling calculations, CMS replied upon market transaction data from 2020 and is yet to consider more recent pricing information related to the current exoskeleton market. In the preliminary decision, CMS stated that they would welcome additional information to accurately reflect the full and current market of devices in the code, including the current ReWalk device, which received FDA clearance in March 2023. In its response, we will provide verifiable information on the current market pricing for present-day technology to inform the determination of a proper base for the gap-filling calculations. We believe this will support a more appropriate reimbursement level for the present-day technology and for a product design that would benefit -- most benefit Medicare beneficiaries. The technical advances in the personal exoskeleton design achieved since 2020 are focused on increased utilization and a robust functionality for everyday use in real-world environments. These design changes were presented to and accepted by the FDA as part of its breakthrough designation program and were subsequently cleared for commercial sale by the FDA in March 2023 with VA and Medicare beneficiary submissions on this new design implemented throughout this year. Key technological advancements include the ability to ascend and descend curbs on city streets along with stairs, indoors and outdoors. These features require changes in software, materials and the design of high-impact components. The design goal was to allow safe utilization in more activities of daily life. The ability to enter a friend's house absent a ramp, step up to a sidewalk without a curb cutout or to enter a small business lacking an elevator all represent opportunities for increased and expanded use. Although fundamentally designed to enable individuals to walk in everyday life, the personal exoskeleton has empowered our ReWalkers to participate in full 26-mile marathons, in one case, ascend the full flight of stairs in a 61-story building. These are seemingly extreme but inspiring. These cases demonstrate how the design is robust, liberating and profoundly empowering for those individuals able to gain access to this life-changing innovation. Next, I want to talk about our strategy to get our exoskeletons to the individuals who want and need them. In addition to what we already had in place, our recent acquisition of AlterG has given us capabilities to expand our reach with far more depth than we had previously. Combined, our customer-supporting teams of local sales representatives, clinicians, trainers, case managers and a service team make up approximately half of our workforce. And they are all on the front lines with patients and clinicians daily. Our first strategic aim is to educate clinicians on the availability of exoskeletons to Medicare beneficiaries as well as update them on the screening and prescription process so that they are able to proactively identify individuals within their practice who may benefit from a personal exoskeleton. Responsibility for this training of the medical community is shared between our local reps and our national clinical teams. To assess individuals who're referred to by the clinician, we have assembled a clinical staff led by our medical director and a staff of physical therapists to properly screen patients as well as a team of case managers to assist in required documentation for subsequent submissions. In parallel, we continue to submit claims today for Medicare beneficiaries who meet all medical eligibility criteria for ReWalk Exoskeleton. We [indiscernible] increasingly base and support system for the beneficiary community and the clinicians who determine eligibility and write prescriptions. We have about 20 pending claims in Medicare and anticipate this rate of submissions to accelerate once the 2024 Home Health Rule goes into effect on January 1. In other words, it's a team effort. And we have the processes in place to execute on our goal of enabling the opportunity to walk again for as many paralyzed individuals as possible. Our expectations regarding market size and penetration are unchanged from what we have [ presided ] in our company presentations. The U.S. had a prevalence pool of 296,000 individuals living with spinal cord injury with an annual incident rate of approximately 17,000 new injuries per year. Based on our experience to date, we estimate that approximately 10% of the individuals within this group will meet all inclusion criteria, which results in a medically eligible population of roughly 27,500 individuals. The percentage of this population with Medicare, Medicaid benefits is about 56%, with Medicare alone accounting for approximately 31%. While the addressable market is sizable, the true market growth for ReWalk requires basic fundamentals of blocking and tackling and will be gradual over the coming quarters and years. We will seek to provide more guidance as implementation gives us a stronger experience base to define penetration. This is a tremendous step forward for individuals living with spinal cord injury, for ReWalk Robotics and for this emerging industry. It sets up 2024 to be a year of exciting growth for ReWalk and a pivotal moment for the community of individuals with spinal cord injury, who will finally have greater access to ReWalk's innovative technology and the benefits of walking again. I thank everyone for their time today. Now we'd like to open up the floor for questions, please.

[Operator Instructions] The first question comes from Swayampakula Ramakanth from H.C. Wainwright.

So as you stated in the opening remarks, for the pricing to be effective on April 1, 2024, by when do you think you should get a final pricing? The reason I'm asking is because it looks like in your -- the way they have calculated, this is based on some 2020 numbers. And as you said, there's been multiple changes on the ReWalk itself. And I don't know how long it will take for them to consider all these additions. And that's why I'm just trying to figure out by when do they need to announce the final number so that it can become effective April 1? Or would these negotiations push that date to a later date?

Thanks for the question there. I believe we have also on the call today Jeannine Lynch, who is our Vice President of Reimbursement, and very closely working with CMS. I'd like her to address this, please.

Yes, yes. Thank you, Larry. Pleasure to be here this morning. In regards to the question as to the timing, what we can look to is what CMS normally does just looking historical. They publish the fee schedules on the schedule of April and October. So between now and giving the max time to load it into their systems. So there's an effective date of April 1 is the timing of it. So it usually comes out sometimes between January and March.

Okay. Okay. So there is quite a bit of time for things to be negotiated. And then how easy -- Jeannine, in your experience, how easy or how difficult is it to work with the CMS and team through these negotiations? Or since they have set a number at this point, is that kind of pretty much set in stone and then negotiations happen in continued review cycles that normally happens year-to-year?

Yes. Rather than think about it as a negotiation, and this is why the HCPCS meeting is going to be very important because as a reminder, as Larry mentioned, they used information from 2020 and what we provide -- will provide at the HCPCS meeting is updated information on the current product offering and information that is verifiable by invoices. So that's the information that will be important for CMS to have so that they're able to potentially incorporate this into their pricing.

Okay. Okay. And then, Larry, you said something about AlterG and how AlterG can help commercialization. Can you expand on that a little bit more?

Well, yes. Part of our decision and expectations of synergy with AlterG was they are very active in the field. They are in 4,000 clinics worldwide, roughly 2,500 or so in the United States. They have a larger sales team than we did. And we will be able to get into more clinics and have a much stronger field presence as a combined organization. So we can build on the relationships they had as they were in every one of the 600 spinal cord injury centers in the United States with their product already. And we will have more feet on the ground. As I indicated, over half of our team now will be in the field, and this is going to do 2 major things for us. The most important is educating the clinical community that this is now possible. People wouldn't write prescriptions for this product because we -- they didn't see a path to get it paid. And it wasn't worth giving the patient false hope or even processing if there was not a path to receiving these products. Once the physicians understand that, it will allow us to build that referral base and prescriptions being written. It's equally important though as I went through the numbers of the market, we know that patients on the inclusion/exclusion criteria to make this properly applicable for them medically limits it to about 10% of the population. It's a sizable number. So we need to educate the physicians so they are selecting patients that we can really help and beneficiaries who get a better life as a result of Medicare's decision. So we've got to do that process properly. So this enlarged team is ideal for our goal of implementing and executing now this process for benefit category and payment is reaching a conclusion. So it is a perfect timing and a lot to do why we did the acquisition when we did.

[Operator Instructions] Seeing that there are no further questions, this concludes our question-and-answer session. I would like to turn the conference back over to Larry Jasinski for any closing remarks.

Thank you, Drew. And thank you for everyone participating and everyone who listens to this subsequently. The vision of Dr. Amit Goffer, who created the original product, is incredibly important here because he had a vision to enable a community to regain activities of daily life. And this is a tremendous and historical event as we described it because for the first time, the dream of Dr. Goffer is being reached. And we are thrilled with the direction and efforts by CMS and with the position that now we, ReWalk Robotics, and this industry is now in to help these patients and enable these patients to be able to walk again. So it is a wonderful time for this industry, and we really look forward to be able to present our progress in the coming quarters. Thanks, everybody, for attending.

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