Lifeward Ltd. Q1 FY2026 earnings call

• Strategic Acquisitions

  • Completed the equity-based acquisition of Oratex, gaining full ownership of the protein oral delivery platform including the ORMD 0801 oral insulin candidate. Clinical development of ORMD 0801 remains managed by Oramed with pre-existing funding, creating a high-upside option for LifeWord with minimal near-term operational cost or management bandwidth demand (only CEO strategic oversight is required).
  • Acquired an upper body exoskeleton technology targeting 4.6 million stroke survivors, which complements the existing Rewalk neurorehabilitation platform. Development work is underway ahead of a commercial launch.

• Operational & Financial Improvements

  • Completed manufacturing transition: closed the Fremont, California facility and shifted production to a contract manufacturer in Massachusetts, including an internal facility relocation within Massachusetts. Temporary supply chain timing disruptions from this transition impacted Q1 2026 shipments, but a backlog of secured orders is in place for future delivery.
  • Strengthened balance sheet: ended Q1 2026 with $11.4 million in unrestricted cash, up from $2.2 million at year-end 2025, driven by a $10 million convertible note financing and $6.5 million in cash from the Oratex acquisition. Operating cash burn declined 33% year-over-year to $3.7 million.
  • Reduced adjusted operating expenses by 12% year-over-year to $5.9 million, driven by improved sales and marketing productivity, lower reimbursement costs, and reduced R&D spending after completing major development programs. GAAP operating loss increased to $10.3 million due to a $4.9 million one-time non-cash R&D charge for acquired Oratex IP; adjusted operating loss remained flat year-over-year at $4.6 million despite lower revenue.

• Commercial Progress

  • Expanded U.S. and international distribution for Reword, and secured new Medicare Advantage reimbursement coverage from major insurers including Aetna, Humana, and UnitedHealthcare. Germany revenue grew ~25% quarter-over-quarter, contributing to the 11% year-over-year growth in Rewalk sales. Shifted to a channel partner model to leverage existing patient access and payer relationships, rather than direct patient outreach.

LifeWord reports total Q1 2026 revenue of $3.9 million, down from $5 million in Q1 2025. The year-over-year decline was driven by temporary supply chain and sourcing disruptions tied to working capital constraints during the company's manufacturing transition. Rewalk personal exoskeleton (core neurorehabilitation segment) revenue grew 11% year-over-year to $1.6 million, contributing ~41% of total Q1 2026 revenue. Gross margin for the quarter was 34.2%, down from 42.2% in the prior year quarter due to lower production volume absorption, higher freight and tariffs, and unfavorable FX movements. No other product segments reported separate revenue figures in the quarter.

• Management maintained prior guidance that full-year 2026 total revenue will be similar to full-year 2026 total revenue, expecting Q2 and Q3 2026 shipments to catch up on the backlog of orders delayed from Q1 2026.
• Management expects an improving exit trajectory for 2026, with stronger performance in the second half of the year than in the first quarter as supply chain issues are resolved and the manufacturing transition stabilizes.
• Management will not update formal forward-looking guidance until the company completes its operational restructuring and manufacturing transition, with no timeline given for new public guidance beyond the 2026 full-year revenue expectation.

• Temporary supply chain and sourcing disruptions from the simultaneous manufacturing facility closure, relocation, and transition to a new contract manufacturer created shipment timing delays in Q1 2026 that negatively impacted quarterly revenue. While most issues are expected to be resolved by Q3 2026, some order delays may carry into the third quarter.
• Lower production volumes during the transition reduced manufacturing absorption, pulling down gross margins in the quarter alongside higher tariff and foreign exchange costs.
• Payer coverage expansion for neurorehabilitation devices is still in early stages, with a pipeline of additional private payers yet to be secured and conversion rate data still developing as distribution shifts to channel partners.

Q: Given Q1 2026's lower revenue from shipment timing issues, will Q2 and Q3 make up the gap to hit the prior 2026 revenue target matching 2025, and can you update on German and U.S. Rewalk unit performance? / A: Management confirmed 2026 full-year revenue will still match 2025 levels, with catch-up shipments spread across Q2 and Q3. The simultaneous manufacturing moves from Fremont to Massachusetts, plus an internal facility shift and new contract manufacturer onboarding, created the Q1 timing delays. German Rewalk revenues increased almost 25% quarter-over-quarter, supporting the 11% year-over-year overall growth in Rewalk revenue to $1.6 million in Q1 2026.

Q: What is the nature of the Alter-G supply and working capital issue, when will it be resolved, and what is the backlog outlook for the next two quarters? / A: The issues were entirely tied to prior cash constraints that delayed procurement, and most issues will be resolved by the end of Q2, with all supply chain disruptions fully cleared by Q3. The company holds a confirmed backlog of Alter-G orders that will be shipped over the coming quarters, and management reaffirmed the full-year 2026 revenue target matching 2025 will be met.

Q: How much of the 800 basis point gross margin decline came from tariffs and FX versus lower production volume absorption? / A: Management stated that 75% to 85% of the year-over-year gross margin gap is attributable to exchange rate fluctuations and tariffs, with the remaining portion coming from lower production volume absorption from the manufacturing transition.

Q: With multiple new acquisitions and strategic changes, how does LifeWord manage resource allocation and what is the long-term growth trajectory? / A: The Oratex acquisition requires no meaningful resource allocation from LifeWord's team: ORMD 0801 development is pre-funded and managed by Oramed, with only CEO strategic oversight required. For the new upper body exoskeleton and core neurorehabilitation portfolio, LifeWord is shifting to a channel partner model where partners with existing patient access and payer relationships handle distribution, eliminating the inefficiency of direct one-by-one patient outreach. This channel-focused strategy is a multi-year plan to scale the full rehabilitation portfolio.