Lifeward Q1 2026 Earnings Call - Oratech Acquisition and Profitability Path

Drew, Conference Moderator/Specialist: Good morning, welcome to the first quarter 2026 Lifeward earnings conference call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing star then zero on your telephone keypad. After today’s presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on your telephone keypad. To withdraw your question, please press star then two. Please note this event is being recorded. I would now like to turn the conference over to Almog Adar of Lifeward, CFO of Lifeward. Please go ahead.

Almog Adar, Chief Financial Officer, Lifeward: Thank you, Drew, and thanks everyone who has joined us on the call today. My name is Almog Adar. I am Lifeward’s Chief Financial Officer, and with me on today’s call is our President and Chief Executive Officer, Mark Grant. Earlier this morning, Lifeward issued a press release detailing the financial results for the 1st quarter ended March 31st, 2026. I would ask you to review the full text of our forward-looking statement from the press release. We anticipate making projections during this call, and actual results could differ materially due to several factors, including those outlined in our latest filings with the SEC. With that, I will turn the call over to Mark.

Mark Grant, President and Chief Executive Officer, Lifeward: Thank you, Almog, and thank you for everybody for joining us today. The first quarter of 2026 marked an important strategic milestone for Lifeward as we successfully completed the acquisition of Oratech. We believe this transaction significantly strengthens Lifeward’s position as a diversified biomedical innovation company while reinforcing our focus on neurorehabilitation and our path for profitability. We believe this was a highly strategic and capital-efficient transaction for Lifeward shareholders. Through the equity-based acquisition of Oratech, we gained access to the protein oral delivery platform, a potentially transformative technology across many therapeutic indications, including ORMD-0801 oral insulin, which is expected to commence a phase II study. Importantly, the clinical program management responsibilities remain with Oramed, utilizing funds previously transferred to Oratech as part of the strategic transaction.

That means Lifeward and our shareholders, by owning the protein oral delivery platform outright, effectively receive a meaningful option on the potential success of the promising technology with minimal near-term operational burden, no material increase in operating expenses, and limited management bandwidth requirements beyond my own involvement, supporting strategic oversight and development guidance. As many of you know, my background includes extensive experience in diabetes and metabolic disease, I believe this platform has meaningful long-term potential. At the same time, Lifeward’s core focus remains firmly centered on scaling our neurorehabilitation med tech business. The second key takeaway from the quarter is Lifeward is now substantially better positioned on its path to profitability. With the $10 million from our convertible note financing, we have significantly strengthened our balance sheet and improved our operating flexibility.

This allows us to stabilize and build upon the fundamental and foundational work we have done over the last several quarters while maintaining our disciplined focus on operational efficiency, market access, and innovation across our neurorehabilitation platform. We expect continued operational stabilization over the next several quarters as our baseline resets following our manufacturing transition initiatives completed over the last year and the consummation of the important transaction this quarter. This gives us improved visibility as we move toward the end of 2026 and into 2027. Turning to commercialization. We continue to make progress expanding distribution in the U.S. and internationally, as well as broadening reimbursement access for ReWalk, including through Medicare Advantage insurers such as Aetna, Humana, and UnitedHealthcare. We believe this positions our entire neurorehabilitation portfolio, and ReWalk in particular, for very long-term growth.

On the commercial side, ReWalk’s personal exoskeleton sales increased 11% year-over-year, reflecting the continued uptrend we are seeing in international sales, reimbursement, and distribution expansion. Total revenue for the quarter was impacted primarily by the AlterG shipments. We experienced temporary timing disruptions associated with working capital constraints late last year that affected sourcing and supply chain execution. Importantly, we have a backlog of secured AlterG orders in place now and have visibility to improve shipment execution during the second and third quarters as we ship against those orders. We are also impacted by tariffs and the financial impacts of our manufacturing transition following the closure of our Fremont, California, facility and the shift to contract manufacturing in Massachusetts. Finally, we continue to evaluate strategic and accretive acquisition opportunities that complement our core rehabilitation and biomedical platform.

During the first quarter, we acquired an upper body exoskeleton technology designed to address the substantial unmet need of approximately 4.6 million stroke survivors. This is a great complement to our ReWalk platform. Development work is underway as we work toward commercial launch. Overall, we believe Lifeward is stronger strategically and operationally than it was a year ago. We are building a scalable platform with improving operational leverage and multiple potential drivers for future growth. With that, I’ll turn the call back over to Almog.

Almog Adar, Chief Financial Officer, Lifeward: Thank you, Mark. Revenue for the first quarter of 2026 was $3.9 million compared to $5 million in the first quarter of 2025. The year-over-year decline was primarily driven by lower AlterG shipments resulting from temporary supply chain and sourcing constraints associated with working capital limitations in the final stage of our manufacturing transition activities. Importantly, ReWalk personal exoskeleton revenue increased 11% year-over-year to $1.6 million, reflecting continued progress in reimbursement coverage, channel expansion, and international sales. Gross margin for the quarter was 34.2% compared to 42.2% in the prior year quarter. The decrease was primarily attributable to lower manufacturing absorption resulting from reduced production volumes, higher freight and tariff expenses, as well as unfavorable foreign currency exchange rate movements. Despite lower revenue, we continue to make meaningful progress in improving our operating expenses structure.

Total operating expenses were $11.7 million, an increase primarily due to a one-time non-cash research and development expenses of approximately $4.9 million related to the acquired intellectual property assets in connection with Oratech transaction. On a non-GAAP basis, adjusted operating expenses declined 12% to $5.9 million, compared to $6.8 million in the first quarter of 2025. The reduction was driven primarily by improved productivity across sales and marketing operations, lower reimbursement-related costs, and reduced R&D spending following the completion of several major development programs. We believe these actions are creating a more efficient operating platform, capable of generating meaningful leverage as revenue volumes increase. GAAP operating loss increased for the quarter to $10.3 million, primarily due to the Oratech-related one-time expenses I just described.

On a non-GAAP basis, adjusted operating loss was unchanged year-over-year at $4.6 million, despite lower revenue, reflecting the benefits of our cost optimization initiatives. Cash used in operating activities declined by 33% to $3.7 million compared to the first quarter of 2025, primarily reflecting improved operational efficiencies and working capital management. Turning to liquidity, we ended the quarter with $11.4 million in unrestricted cash and cash equivalents, compared to $2.2 million at the year-end 2025. The increase reflects the successful closing of our strategic transaction, including the $10 million financing and the additional approximately six and a half million dollars of cash associated with the Oratech acquisition. As we move through 2026, our focus remain on disciplined cash management, improving operational efficiency, and positioning the business for scalable growth and long-term profitability.

With that, we will now open the call for Q&A, followed by closing remarks from Mark.

Drew, Conference Moderator/Specialist: We will now begin the question-and-answer session. To ask a question, you may press star then 1 on your telephone keypad. If you’re using a speakerphone, please pick up your handset before pressing the keys. If at any time your question has been addressed and you would like to withdraw your question, please press star then 2. At this time, we will pause momentarily to assemble our roster. The first question comes from Dr. Yale Jen with Laidlaw & Company. Please go ahead.

Dr. Yale Jen, Analyst, Laidlaw & Company: Good morning, thanks for addressing the question. My first one is in terms of AlterG, we understand the first quarter figure was just due to the shipment timing of shipments. Should we anticipate for the second and third quarter you will get back to the level similar to last year and it sort of make up for the differences? I have a follow-up.

Mark Grant, President and Chief Executive Officer, Lifeward: Hey, Yale. I think that’s a fair assumption, you know, I think it is gonna bridge across the second and third quarter.

Dr. Yale Jen, Analyst, Laidlaw & Company: Okay, maybe just on top of that question. The last earning calls, you guys suggest that the 2026 total revenue will be similar to 2025. Giving a little bit lower first quarter figure this year, should we anticipate additional growth in the remaining 3 quarters again to match up to the total revenue similar to last year?

Mark Grant, President and Chief Executive Officer, Lifeward: I think some of the things that most people don’t appreciate, and we probably didn’t explain well, is we had a manufacturing move from Fremont to Massachusetts. We also had a complete facility move within Massachusetts, and we started a contract manufacturer all at the same time. All of these things led, with our cash constraints, to timing issues on everything. I would expect that we have similar to last year, and I would also expect the exit trajectory to be better than it is an entry trajectory.

Dr. Yale Jen, Analyst, Laidlaw & Company: Okay, great. That’s very helpful. Maybe the last question here is the ReWalk units in German, the leads in German, maybe also in U.S. Could you give a little bit color on both of those? Thanks.

Almog Adar, Chief Financial Officer, Lifeward: The revenues in Germany specifically increased, almost 25% quarter over this quarter.

Dr. Yale Jen, Analyst, Laidlaw & Company: Okay

Almog Adar, Chief Financial Officer, Lifeward: in ReWalk. In total, the increase is 11% year-over-year. For ReWalk revenues, we ended with $1.6 million compared to $1.3 million in prior year quarter.

Dr. Yale Jen, Analyst, Laidlaw & Company: Okay. Okay, good. That’s very helpful. Thanks a lot. I get back to the queue.

Mark Grant, President and Chief Executive Officer, Lifeward: Yeah, thank you.

Almog Adar, Chief Financial Officer, Lifeward: Thanks, Tim.

Drew, Conference Moderator/Specialist: The next question comes from Dr. Swayampakula Ramakanth with H.C. Wainwright & Co. Please go ahead.

Dr. Swayampakula Ramakanth (RK), Analyst, H.C. Wainwright & Co: Thank you. This is RK from H.C. Wainwright. Couple of questions from me, Mark and Almog. Just trying to understand the AlterG supply/working capital issue. What’s the nature of that? You know, do you think you have already resolved it, or do you feel you can get it resolved soon so that the flow of product into the market during Q2 and Q3 is going to be, you know, is going to be smooth? Additionally, you know, I’m not sure you stated this in the call, is there a book of sale that you can give us so that we understand what is expected over the next couple of quarters?

Mark Grant, President and Chief Executive Officer, Lifeward: Yeah. I’ll address the first part. I’ll let Almog pick up the second part. It by and large, we are going to resolve the issues with AlterG as we go through and exit this quarter. Those were RK, those were basically and really relegated to the cash constraint and procurement as we pushed into this quarter. It’s a timing issue for us. As we stated, we have a backlog of AlterG sales that we’re working through today, and we expect those sales to gain momentum as we exit the quarter and move into Q3. I will caution everybody, I don’t believe I’m gonna resolve everything this quarter. I think that we’ll actually probably carry some into next quarter, but during Q3, we should become whole and be in really good shape.

As far as the outlook, again, Almog can give the color on. As far as the outlook, we’re gonna continue to hold that revenues will be similar to last year, and you should see these trajectory changes as we exit the year. But this has been a substantial you know, restructuring of the company, you know, moving to the new strategic partner, changing facilities. As we get through this lift and start to really mature things, we’ll start to give a forward-looking forecast, but right now we’re gonna hold.

Dr. Swayampakula Ramakanth (RK), Analyst, H.C. Wainwright & Co: Okay, thanks. This is Almog.

Mark Grant, President and Chief Executive Officer, Lifeward: Almog, anything to add?

Almog Adar, Chief Financial Officer, Lifeward: No, nothing specific. At this stage, as Mark mentioned, we are not providing this year guidance, but we expecting like to be similar to previous year and to do some catch-up in Q1. Great. On the gross margin decline of 800 basis points, how much of that is tariff versus FX versus, you know, either volume or absorption?

It’s a good question, RK. The fluctuation in the exchange rate together with the tariff, it cover between 75%-85% from this gap compared to prior year quarter. The other is mainly the absorption that we mentioned related to the production reduction.

Dr. Swayampakula Ramakanth (RK), Analyst, H.C. Wainwright & Co: Okay. couple more questions from me. Sorry. on the, you know, on the, on the Medicare Advantage coverage that you have, you know, from, Aetna, Humana, and UnitedHealthcare, you know, is there a way you can give us additional commentary, you know, regarding, you know, what’s the traditional Medicare and what’s the conversion rate that you’re seeing, you know, especially on submitted claims?

Mark Grant, President and Chief Executive Officer, Lifeward: When I came into the business, I did an assessment of the business, and part of that assessment was actually looking at moving products into the payer landscape and what it takes. If I look back over the innovation trail of Lifeward, they did a phenomenal job of innovation. You know, where they actually had some gaps were how they addressed payers. You know the story over the last three years where they’ve really started working with Medicare to gain coding, to gain pricing, and then now we’ve started to get coverage and payer placement across other payers. We have a team in the background that’s been working with us since I joined the company to assess the situation and to build it. Since you now you’ve seen, you know, Aetna, United, and Humana come on board, and our pipeline continues to grow.

We need to push further into the private placement into the market, the blues of the world, if you will. That pipeline continues to build. Part of the structure is that we’re moving to our channel partners, which we announced, like Verita Neuro, who have deeper transitions into payers. My goal is to get to every patient everywhere in 2 forms, 1 of which is through their payer, and secondarily is to get to them in the community. You’re asking a great question. This is the piece of the business that has great overlap with my past and that we’re building on today. I don’t have a direct answer for the pipeline right now as we continue to shift that pipeline from us to our channel partners and continue to build out the distribution network.

There’s a lot more to come on this. It’s probably the most exciting piece about the business outside of the innovation.

Dr. Swayampakula Ramakanth (RK), Analyst, H.C. Wainwright & Co: Thanks. Talking about shifting the pipeline, you know, not only you have the products from Oratech, but now you also have an upper body exoskeleton product, which you brought onto the portfolio. Since there are, like, quite a few moving parts, how are you managing your resources and also navigating through all these changes? You yourself are kind of, you know, getting settled into this. I’m just trying to understand, you know, what’s the trajectory of things? How should we think about growth from here? You know, is this a two-year plan or is this a five-year plan?

Mark Grant, President and Chief Executive Officer, Lifeward: I think a couple things, 1 of which is everybody should understand that I’ve got 3 decades of actually managing these particular revenue cycles, so they’re very comfortable to me. Number two, and just to redescribe the Oratech transaction, there is little to no interaction from our staff with what needs to happen with ORMD-0801 oral insulin. That’s gonna be handled with Oramed and also is pre-funded. I’m the only one who actually has overlap with that from a strategic perspective, so it doesn’t have any drain on resources. That’s 1 thing that’s really exciting.

As we bring in the new upper body exoskeleton, and I’m glad you mentioned that, and we start to work against commercialization and finalizing MVP and bringing that to market, you know, that You’re gonna find that we’re gonna be known as an innovator, an aggregator, and an exploiter of commercial models, right? Those in particular are panel partners. You know, we’re looking for partners and have partners secured that have these patients at hand. Going out and finding these patients one by one, the needle in the haystack, is definitely not a good business model, and that’s why we’ve made the conscious shift. We’re gonna work with panel partners that excel in these areas, like the CorLife’s of the world, you know, that we work with workers’ comp, where they have these patients at hand, they can market to them, and it’s a complementary therapy.

You should expect the same for all of our portfolio. That’s where the vast amount of my experience was spent, was developing panel partners, you know, driving innovation and execution, and then obviously the payer landscape, you know, with my background. Those shifts are super exciting and needed for the company. Going to areas where we actually can get to patients directly with panel partners is probably one of the most important things to me going forward.

Dr. Swayampakula Ramakanth (RK), Analyst, H.C. Wainwright & Co: Thank you. Thanks for taking all my questions, Mark and Almog Adar.

Mark Grant, President and Chief Executive Officer, Lifeward: Yeah, thank you.

Almog Adar, Chief Financial Officer, Lifeward: Thanks, Satyam.

Drew, Conference Moderator/Specialist: This concludes our question and answer session. I would like to turn the conference back over to Mark Grant for any closing remarks.

Mark Grant, President and Chief Executive Officer, Lifeward: Drew, thank you. We believe that Lifeward is entering into a new phase as more diversified biomedical innovation company with improving financial flexibility and a clear path for profitability. We remain focused on executing our operational priorities, scaling our neurorehabilitation platform, and advancing strategic partnerships while fostering a unique and potentially very high-value event with our biomedical platform. Thank you again for joining us today. We look forward to updating you on our progress next quarter. Thank you, everybody.

Drew, Conference Moderator/Specialist: The conference has now concluded. Thank you for attending today’s presentation. You may now disconnect.