LFWD

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.

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.

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.

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.

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.

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.

Hey, Yale. I think that's a fair assumption, you know, I think it is gonna bridge across the second and third quarter.

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?

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.

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.

The revenues in Germany specifically increased, almost 25% quarter over this quarter.

Okay

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.

Okay. Okay, good. That's very helpful. Thanks a lot. I get back to the queue.

Yeah, thank you.

Thanks, Tim.

The next question comes from Dr. Swayampakula Ramakanth with H.C. Wainwright & Co. Please go ahead.

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?

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.

Okay, thanks. This is Almog.

Almog, anything to add?

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.

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?

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.

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?

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.

Thank you. Thanks for taking all my questions, Mark and Almog Adar.

Yeah, thank you.

Thanks, Satyam.

This concludes our question and answer session. I would like to turn the conference back over to Mark Grant for any closing remarks.

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.

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

Good day, and welcome to the Lifeward Inc fourth quarter 2025 earnings conference call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. 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, and to withdraw your question, please press star then two. Please note today's event is being recorded. I would now like to turn the conference over to Almog Adar, Chief Financial Officer. Please go ahead.

Thank you, Rocco, and thanks, everyone who's joined us on the call today. My name is Almog Adar. I'm 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 fourth quarter and the full year ended December 31st, 2025. I would ask you to review the full text of our forward-looking statements 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 filing with the SEC. With that, I will turn the call over to Mark.

Good morning, and thanks, everyone, for joining us on the call today. Before we get into the details of the quarter and the year, I want to start with what we believe is fundamental to the Lifeward investment thesis today. We're executing against a strategy to build a leading diversified biomedical innovation company with multiple technology platforms and strong clinical foundations. Importantly, we're establishing a clear line of sight to scale through continued progress in reimbursement, commercial execution, and product innovation. Our strategic transaction with Oramed gives us meaningful access to capital to support our growth initiatives, and we remain focused on driving the business toward cash flow positive operations while investing in innovations that will define the future of the company. An important milestone for Lifeward is the pending close of our strategic agreement with Oramed following the receipt of shareholder approval last week.

This partnership significantly strengthens our financial foundation and expands our strategic scope. I want to thank our shareholders for approving the transaction. Your support reflects confidence in the strategy we've laid out and the opportunity ahead of us. I also want to acknowledge the outstanding team at Oramed. They've been great partners, and I look forward to building a long-term collaboration that creates meaningful value for patients, partners, and shareholders. Personally, this opportunity is particularly exciting for me given my background in diabetes at Medtronic and metabolic health at Bristol Myers Squibb. One of the more compelling assets in this partnership is ORMD-0801, an advanced clinical stage oral insulin candidate that has the potential to fundamentally change how insulin therapy is delivered. Because oral insulin is delivered through the gut, it goes through the liver first, mimicking the path of natural insulin for the pancreas.

For the patient, this can mean better regulation of glucose production by the liver and less circulating through the body, which can reduce weight gain and the risk of hypoglycemia. Multiple studies have shown no increased risk of hypoglycemia compared with placebo. This is an important distinction in the insulin field and, if successfully developed, could meaningfully improve both patient safety and treatment adherence. We're excited about the potential of this program and believe it represents meaningful addition to Lifeward's long-term innovation platform. The current plan is to move forward with the new U.S. study. The unique funding structure for the clinical program also allows Lifeward to maintain pinpoint operational focus on profitability and cash generation of our portfolio while simultaneously gaining exposure to the potential substantial upside of a large-scale biotech opportunity.

Another major recent step forward for the company is the acquisition of intellectual property and technology from Skelable. This transaction was structured in a very capital efficient way, and we believe it will prove to be highly accretive as the technology advances to market. The technology we acquired supports development of a powered upper extremity orthotic system with AI capabilities designed to assist functional movement and restore function in individuals with weakened or paralyzed arms and hands, particularly following stroke. The device is intended to enable patients to perform activities of daily living that would otherwise be very difficult or impossible while supporting therapeutic goals such as muscle re-education and improved range of motion.

In the U.S. alone, this upper body neuro rehab system can help an estimated 245,000 newly diagnosed stroke survivors annually and an addition of 4.6 million stroke survivors who remain disabled. With plans to develop and launch the product, we are eager to get to this patient population. What makes this acquisition particularly valuable is not only the technology itself, but it's the team that comes with it. As you know, you don't have the opportunity for outside in inflection points that often. The core Skelable engineering group will be joining Lifeward, bringing more than 60 years of combined experience across electrical, software, mechanical, and industrial design. That experience is incredibly important as we integrate the technology into our development framework.

Bringing the original engineering team with the platform ensures continuity of knowledge and allows for a disciplined transfer of intellectual property, design intent, and technical architecture into our broader pipeline. The stellar engineering team will also be a core team working on advancing and the rest of our neuro rehab product portfolio. We believe this platform expands Lifeward's leadership into whole body robotic rehabilitation and opens a significant market opportunity with neuro rehabilitation. In fact, the new platform is highly complementary to our existing ReWalk ecosystem. We will leverage our established clinical relationships, distribution network, and reimbursement channels to accelerate at time of commercialization. I want to underscore here that Lifeward's focus in robotic rehabilitative technologies is exactly that, to rehabilitate and help the human return to full function or return to as much function as humanly possible.

We're committed to continuous innovation, deploying the most advanced robotics and AI technologies to restore full health and quality of life to a broadening patient population. Now turning to our established core neuro rehab business. We continued to make important progress across reimbursement, clinical partnerships, and global distribution during the year. At the same time, revenue for the quarter and for the full year came in lower than estimated, and there were two primary drivers behind that. First, in the United States, we implemented a major change in our sales and distribution infrastructure. As we discussed on our third quarter call, we began a transition toward a hybrid model that combines our internal direct sales efforts with external channel partnerships. Building those partnerships takes time. They don't translate into revenue overnight, so you're not seeing the full impact of those changes in our numbers yet.

Within this restructured, also our sales organization internally to better align with our business evolving. Today, our commercial efforts operate across three focus areas. First, our direct-to-patient channel, which supports individuals pursuing a personal ReWalk system through the reimbursement process. Second, our capital equipment sales team, which focuses on institutional customers, including rehabilitation centers, hospitals, and sports medicine facilities for AlterG. We believe there are substantial untapped opportunities here that can better be served by our capital equipment sales team. The third is a dedicated reimbursement and payer engagement function that works across all payers to expand coverage and support both our direct and distribution channels. As you know, reimbursement is a critical driver of our long-term growth strategy, and building a stronger payer engagement capability is essential to expanding patient access, accelerating adoption of our technologies.

It's critical for our patients to be able to access our technologies through their healthcare benefit in their community. We believe this structure will ultimately improve the overall sales process, strengthen payer engagement, and drive greater adoption. As those changes mature, we expect to see the positive effects begin to show in the coming quarters. The second factor affecting the revenue was a decline in AlterG sales tied to a specific distributor dynamic. In 2024, one of our distributors made a very large inventory purchase. That distributor did not place that comparable in 2025, which created a year-over-year comparison headwind. Based on our discussions with them, we expect that purchasing to normalize again in 2026. Despite those temporary dynamics, the underlying fundamentals of the business remain strong. Reimbursement coverage continues to expand, clinical demand remains solid, and we're building a growing backlog and qualified pipeline.

Recently, we achieved reimbursement for coverage of ReWalk in the three largest Medicare Advantage insurers in the U.S., Aetna, Humana, and UnitedHealthcare, which collectively represent over 16 million covered lives in America. We also made meaningful progress expanding international distribution for ReWalk. Following the receipt of the CE mark in September of last year, we have been accelerating our efforts across Europe. Germany has become our primary international test market and is proving to be valuable insights into reimbursement pathways, clinical adoption, and patient demand. International markets represent a significant long-term opportunity for the ReWalk platform, and we're opportunistic about the trajectory we're seeing so far. Through an agreement with Verita Neuro and a partner-led capital-efficient structure, we expanded distribution into Mexico, Thailand, and the United Arab Emirates. Our core neuro rehabilitation business serves as a powerful innovation engine for Lifeward.

We have multiple next-generation technologies in development. A new version of AlterG should be expected, and our next generation ReWalk is currently targeted, and with the Skelable IP and technology acquisition, we expect our upper body exoskeleton platform to reach the market too. Together, these programs significantly expand our addressable market and strengthen our long-term product pipeline. I will now turn the call over to Almog to review our financial results and provide additional detail in operating performance and liquidity position. Before doing that, please note, given the significant transformation Lifeward has recently undergone and the pending close of our agreement with Oramed, we will not be providing guidance at this time.

We remain excited about the long-term prospects and cautiously optimistic about the growth in our core med tech business, together with continued improvements in operating expenses, will help drive the company toward a positive cash flow in the near future.

Thank you, Mark. Today, as we have a lot to share about the existing transition Lifeward is making into a diversified biomedical company, I will review highlights of our full year 2025 results. You may refer to the detailed report for the quarter and full year in our press release, which was issued earlier today. Please keep in mind that as we review our results, I will discuss both GAAP and non-GAAP figures. The non-GAAP results exclude the item detailed in the reconciliation table in today's earnings release and, in our view, provide a clear picture of the company's underlying operating performance.

I encourage you to refer to the GAAP results in the reconciliation table as we go through the 2025 financials. Revenue for the year ended December 31st, 2025, was $22 million compared to $25.7 million in 2024, a decrease of approximately 14%. Revenue from the sales of ReWalk Personal Exoskeleton was relatively flat at $8.5 million in 2025 compared to $8.9 million in 2024. Importantly, while revenue remained relatively stable, the number of units sold increased by 22% year-over-year, reflecting growing adoption of the ReWalk Personal System and increased reimbursement-driven demand. We believe this trend reflects continued progress in reimbursement coverage and increasing clinical adoption of the ReWalk Personal System.

Revenue of the MyoCycle FES bike declined by 50% to $600,000, primarily reflecting the transition away from an exclusive distribution arrangement and the company's strategic focus on its core product portfolio. Revenue from the sales of AlterG products and services was $12.9 million, a decline of 18% from 2024. This decrease was primarily due to lower international sales, including timing factor related to one international distributor that had placed larger orders in the fourth quarter of 2024. We believe the decline largely reflects the timing of distributor orders, which can vary from period to period. Across both the ReWalk and AlterG product lines, our commercial pipeline remains healthy. For the ReWalk product line, we closed the year with a pipeline of more than 104 qualified leads in process in the United States.

Our growing medical leg-related accounts receivable balance also positions us well for future cash inflows. In Germany, we had 49 leads in process at year-end, including 22 active rentals which historically convert to sales within three to six months. For AlterG, we closed the quarter with 26 systems in backlog. Move to gross profit. Gross profit increased in 2025 to $8.4 million or 38.2% of revenue compared to $8.2 million or 32% of revenue in 2024. On a non-GAAP basis, 2025 gross profit was $9 million or 41% of revenue, compared to $11 million or 43% of revenue in 2024. The year-over-year decrease in adjusted gross margin was primarily driven by lower sales volume, which reduced absorption of fixed manufacturing overhead as well as higher tariffs and freight expenses.

Operating expenses declined by 25% to $28.1 million in 2025 compared to $37.6 million in 2024. This decrease primarily reflects the impact of larger impairment charge recognized in the fourth quarter of 2024 related to certain acquired intangible assets, compared to a $2.8 million goodwill impairment charge recorded in 2025. On a non-GAAP basis, adjusted operating expenses also declined by 12% to $24.1 million in 2025 compared to $27.5 million in 2024. This decrease was primarily driven by improved productivity in marketing and sales operations, greater efficiency in reimbursement activities, and lower R&D spending following the completion of major development programs. We expect the positive trend in marketing and sales efficiencies to continue into 2026.

At the same time, we plan to increase investment in R&D as we advance new products to market, including our recently acquired power upper body exoskeleton. Operating loss narrowed by 33% in 2025 to $19.7 million compared to $29.3 million in 2024. This was primarily due to a $9.8 million impairment charge recognized in the fourth quarter of 2024. On a non-GAAP basis, operating loss narrowed by 9% to $15.1 million compared to $16.6 million in 2024. Net loss narrowed by 31% to $19.9 million in 2025 compared to $28.9 million in 2024. On a non-GAAP basis, adjusted net loss narrowed by 5% to $15.3 million in 2025 compared to $16.2 million in the prior years.

We also reduced operating cash usage by 23% to $16.8 million in 2025 compared to $21.7 million in 2024. The improvement was primarily driven by better working capital management, including stronger collection of receivables and lower inventory levels. The benefits was partially offset by lower revenues relative to operating expenses. During the fourth quarter, we entered into a $3 million loan agreement with Oramed, providing additional capital support to further strengthen our liquidity position as we move towards closing the broader strategic transaction. As of December 31, 2025, Lifeward had $2.2 million in unrestricted cash and cash equivalents on its balance sheet. We expect to finalize the closing of our strategic transaction with Oramed in the coming days, with only a few remaining administrative steps.

Upon closing of the transaction, the company expects to receive $10 million in a convertible note, a financing from Oramed and another investor, as described in January 13th, 2026, press release. With that, I will turn the call back to Mark for closing remarks.

To close, I want to return to the broader picture. Lifeward today is evolving into a diversified biomedical innovation company built on multiple complementary platforms, neurorehabilitation, robotics, and metabolic therapeutics. Each of these areas offers meaningful growth potential, and together they position us to build a company with scale and impact of a billion-dollar-plus enterprise over time. With Oramed partnership, we now have access to the funding necessary to execute this strategy, and we will remain disciplined in our approach as we move the company forward to cash flow positive operations. We're confident in our roadmap, confident in the strength of our technology platforms, and confident in our ability to execute. Thank you, everyone.

Thank you. We'll now begin the question and answer session. To ask a question, you may press star then one on your telephone keypad. If your question has already been addressed and you'd like to remove yourself from queue, please press star then two. Our first question today comes from Yi-Jen at Ladenburg Thalmann. Please go ahead.

Good morning, and thanks for taking questions and congrats on the transformation. Maybe a few questions related to that. The first one is for the Oramed POD technology. I mean, if the focus is on this oral insulin, how would that align with your? I mean, first of all, how much work is needed to be done before get approved? And secondly, how would that align with your or leverage your commercial infrastructure?

Yeah, a lot of that question is gonna have to be answered once we actually get through the close. In short, right, you know, I've got a long history, almost three decades in the metabolic space, and so this is really drive synergies across med tech and biotech. You know, when you're looking at a diversified portfolio and a durable company, I think it positions us really well. I also think that if you look at how we're approaching the market and moving from a centralized approach of selling patient to patient to decentralized and excluding commercial models, you know, having a biotechnology like this fits. You know, we become an innovation company that then allows us to actually move into a decentralized approach.

Okay. Maybe just if I may add it. In terms of your current commercial infrastructure, how would the end product like that be able to leverage your current, you know, availability, or you would need to build up a new sales force or other to be able to accomplish successful commercialization?

Yeah. I think the beauty of this is in the short term. You know, while we continue to go through clinical trials, this is completely funded through the acquisition and allows us to actually keep completely focused on our core business while we continue to expand the opportunity with Oramed. The good news is, you know, in the short-

Okay.

Yeah. Good news is, Yale, in the short term, it's actually fully funded and in motion. Secondarily, you know, just to expand on your question of, you know, what does it mean for our distribution network? Look, I've got multiple years experience developing these networks and bringing products to market. When the commercialization opportunity presents itself, we'll be adept at that as a company. It's something I'm going to pull through while we're going through the clinical trials.

Maybe just one more question here. In terms of your upper extremity robotic assistance, I guess you suggest that it will take 18-24 months to complete. Could you give us a little bit specific timeline in terms of the study need to be done, the regulatory process and maybe lastly, how do you see the market of that and how that complements your ReWalk system? Thanks.

Yeah. If we're able to stay in the current space that we believe we're going to be in in coding, this becomes a 510(k)-exempt product. As we go through innovation and bringing it to commercialization, the barriers to entry are quite low. We still have more to discover as we go through and making sure we meet the appropriate coding and making sure that we fall into that category. That's the trajectory that we believe that we see and that we've discovered during diligence. As far as the 18-24 months, we're confident hitting that. We've already started that work.

Would that be some sort of clinical study needed there? Any timeline you can suggest on that as well as the timeline after that for the regulatory process. Thanks.

We haven't outlined the exact clinical study yet. What we do know is it won't need to be high in numbers, and it's probably gonna be more oriented to a safety or bench study, to show efficacy and safety. It's not something that takes a large amount of time, given the barrier, given the hurdles to entry are low. You don't have to have a high clinical bar.

Okay, maybe the last question here is in terms of this, the upper extremity, there seems to be other competitor in this space, currently, and how do you see your benefits over, you know, others to be, you know, commercially successful? And thanks.

Look, that's a great question. Yeah, I think that there's so much to come that I'm gonna reserve the opportunity to answer that at a later date. As I see it today, we're gonna enter the market differently. While there may be competitors in this space, our job is actually for expansion into new areas. Let me get a little bit under my belt before I actually address that one. I think you guys are gonna be excited about the simplicity and efficacy of this product.

Okay, great. Appreciate it. Thanks a lot. Congrats on the transformation process, and I get back to the queue.

Yeah, thank you.

Thank you. As a reminder to ask a question, please press star then one. Our next question comes from Swayampakula Ramakanth with H.C. Wainwright & Co. Please go ahead.

Thank you. Thank you. This is RK from H.C. Wainwright. Good morning, Mark and Almog. A broad high-level question, you know, similar to what Yale was just asking. I think about two or almost three years ago now, the previous management brought in AlterG to kind of expand on their, you know, within the med tech mobility space. And then, you know, it just, you know, trying to integrate that whole business together when Mark, you came on board, and now you're kind of pulling another lever into, kind of biotech sort of space. Plus on top of that, you added this upper extremity portion of it.

In general, you know, for an investor trying to follow the story, how should he or she think about this, you know, at a high level? You know, if they are concerned that you're going multiple places without kind of strengthening or deepening in one area, you know, is that a fair assessment or people are not really understanding, you know, the strategy?

RK, great to hear your voice, and thank you for the question. Look, I think the fundamentals of commercialization, you know, weren't as strong or stable as they should have been. I think what everybody should expect is getting products to the market through the right channel with the right coverage are most important. What you're gonna see over time is us evolving into an innovation company that understands the channels to go to market. It's not gonna matter whether it's a biotech or a med tech product. I'm gonna use the experience that I've gained over the last 30 years and also the experience that we're building within the organization through our payer and channel team to exploit these opportunities.

I think the expectation is, hey, listen, you've got a very diversified med tech and biotech portfolio, which should be very, gosh, exciting, durable. It should be able to weather the storms of what comes and goes for us. Also give us a lot of different opportunities to move products into the space. What you're gonna see is this will become an execution company that understands reimbursement and commercialization better than anybody else. As you know, but I'll make sure the broader audience does, I've actually authored thousands of payer and commercial contracts across the globe. Bringing that discipline here into the business coupled with the new operational discipline, that's what we should be known for.

You know, is getting the right products through the right channels at the right time with the operational discipline that allows us to scale.

Okay.

I think, you know, the one thing that's probably a little confusing to everybody, so I'll get the elephant in the room. You know, being a core neuro med tech company and then moving into biologics, you know, does it make sense? From an investor standpoint, it absolutely makes sense. Who wouldn't want the aspects of having a biologic on the hook, you know, inside the organization? Who also wouldn't wanna have it on the hook for somebody who's known for executional discipline and commercial channels? You know, I think that, you know, I'm gonna have to work over time on my talk track around what it looks like when you have multiple backgrounds.

If you look across, you know, some of the larger organizations in the world, having a biodiverse med tech company is important, and having those differentials in the same ecosystem is doable.

Okay. Thanks for that. Talking about execution, you know, initially we were under the impression that, you know, your full year revenues would be within the range of $24 million-$26 million, but obviously it's higher. What drove this additional execution? And do you think, you know, some of the things that you brought to the table are helping out, and that's the sort of stuff that we should be looking for in 2026 and 2027?

I'm gonna describe this company a little bit because I think it's important to the answer. You know, I view the company as a startup even though it's actually got a long tenured history. The reason I do that is because the commercialization and understanding of the reimbursement pathways weren't explicit. As we've integrated those into the organization and started to pave the way for growing the reimbursement, which everybody has seen, you know, since I've joined, we've started to garner better payer and global coverage, and we'll continue to do that over time. We're still not there, right? We still have another 12-18 months until we maximize the coverage across our products. I think that's important. That discipline did not exist.

Secondarily, there was a lot of lift and shift of manufacturing that was going on as I entered the business. I would love to tell you it was as planful as it should have been, and it wasn't. The good news is I've done it before, so we actually have cleaned up some of those areas. We're looking for the highest quality products on the market, you know, delivered on time. And we've gone through those disciplined executions inside the company and started to put the framework so we can lift and shift and do this with other products. I think really the importance of building the business fundamentally, and I've said this before from a foundation from the bottom up, you know, the good news is there wasn't a lot here.

When we actually, you know, I know what good looks like, so when we build it from the bottom up, we'll have the operational procedures in place to bring in new technologies. We'll also have the reimbursement understanding and a team that's well adept across a multitude of products, whether it's biotech or medtech. Then lastly, we'll have the channels for distribution already set up and going. Those three areas are core to us as we go forward.

Okay. One last question from me before I get back onto the queue. You know, in terms of placements for Medicare beneficiaries this year, obviously it was a record. You know, is there a way for you to quantify the backlog that you currently have as you enter 2026?

RK, there is, you guys know that we've been getting to the data. As we've expanded our payer coverage, though, we're going back through the qualified leads and pulling more and more into the pipeline. That's new since we've got a lot of reimbursement coverage. I think what's exciting is the 22% growth in units year-over-year. I think you need to stay hyper-focused on that and hold us to that unit number. You're going to see that expand as we move, you know, through this quarter and into next. The pipeline is not solidified right now because the reimbursement is growing. The line of sight is actually growing, which is good news, but I don't have the exact numbers for you today.

Okay. Thank you very much. Thanks for taking all my questions.

Yeah, thank you. Yeah, appreciate it.

Thank you. That concludes our question and answer session. I'd like to turn the conference back over to the company for any closing remarks.

Listen, I wanna thank everybody for showing up today. Appreciate the support. We're excited about the journey that we're getting ready to head on and can't wait to report out next time. Thanks, everybody. Have a great day.

Thank you, sir. That 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.