Lifeward Q2 2025 Earnings Call Transcript

Quartr
Provided by Quartr
August 14, 2025

Key Takeaways

  • Positive Sentiment: FDA clearance secured for the ReWalk 7 Personal Exoskeleton with over 20 units installed in the US and CE clearance nearing completion in Europe.
  • Positive Sentiment: Transitioned to in-house manufacturing of the ReWalk exoskeleton, yielding cost savings, quality control improvements, and enhanced production flexibility.
  • Neutral Sentiment: Q2 revenue was $5.7 M (down 15% YoY but up 14% QoQ), driven by record ReWalk Medicare placements and an 86% increase in the qualified US pipeline since Q3 2024.
  • Positive Sentiment: Quarterly cash burn improved to $3.9 M from $5.6 M a year ago, ending the period with $5.1 M in cash and no debt.
  • Negative Sentiment: Full-year 2025 guidance was reset to $24–26 M in revenue and a non-GAAP net loss of $12–14 M, reflecting a more conservative outlook.
AI Generated. May Contain Errors.
Earnings Conference Call
Lifeward Q2 2025
00:00 / 00:00

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Operator

Good day, and welcome to the second quarter twenty twenty five LifeWorks conference call. All participants will be in listen only mode. If you do 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. Please note this event has been recorded.

Operator

I would now like to turn the conference over to Mr. Almohadar. Please go ahead.

Almog Adar
Almog Adar
CFO at Lifeward

Thank you, Alicia. Good morning, and welcome to LifeForward's Second Quarter twenty twenty five Earnings Call. I am Almoha Gadal, Life Forward's Chief Financial Officer, and with me on today's call is Mark Grant, our President and Chief Executive Officer. Earlier this morning, LifeWorks issued a press release detailing financial results for the three and six months ended 06/30/2025. The press release and webcast of this call can be accessed through the Investor Relations section of the LifeWorks website at golifeword.com.

Almog Adar
Almog Adar
CFO at Lifeward

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 Life Forward management as of today and involve risks and uncertainties, including those noted in our press release and our filings with the SEC. Such forward looking statements are not guarantees of future performance. Actual results may differ materially from those projected in the forward looking statements. LifeWorks specifically disclaims any intent or obligation to update these forward looking statements, whether as a result of new information, future development, or otherwise, except as required by law.

Almog Adar
Almog Adar
CFO at Lifeward

A replay will be available shortly after 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 our website at goliveworld.com. For the benefit of those who may be listening to the replay or the archived webcast, this call was held and recorded on 08/14/2025. Since that date, LifeWorks may have made subsequent announcements related to the topic discussed, So please reference to the company's most recent press release and SEC filings for the most up to date information. And with that, I will turn the call over to LifeWorks' President and CEO, Mark Grant.

Mark Grant
Mark Grant
President, CEO & Director at Lifeward

Thank you, Almagh. Good morning, everyone, and thank you for joining us today. I'm Mark Grant. It's a privilege to speak with you on my first earnings call as LifeWorks President and Chief Commercial Officer. Over the past several weeks, I've met with our teams, customers, and partners, and I've been inspired by the positive energy and deep commitment that runs through this company.

Mark Grant
Mark Grant
President, CEO & Director at Lifeward

Lifebird is built on a foundation of innovation, purpose, and patient centered delivery, and I intend to build on that strength as we move forward. Our strategy is clear, delivering life changing solutions efficiently and at scale, guided by an unwavering commitment to the patients at the heart of everything we do. That means accelerating commercial adoption across all of our products, expanding our portfolio of cutting edge solutions, and holding ourselves accountable through the operational rigor needed to deliver sustainable results for customers and shareholders alike. I also live this mission personally. A little over twenty years ago, I experienced a spinal cord injury that resulted in left leg paralysis and a long difficult recovery, a journey in which I could have directly benefited from LifeWorks portfolio.

Mark Grant
Mark Grant
President, CEO & Director at Lifeward

That experience combined with more than two decades of global medical device leadership and commercial execution, operations, and payer engagement gives me a very unique perspective on both patient needs and the path to delivering our solutions at scale. Frankly, it started even earlier than my endured. Decades spent with my father-in-law, one of the first deans of disability support services in the university system, left an indelible mark with me. He played a pivotal role in instituting Section five zero four of the Rehabilitation Act of 1973 and in driving the support and execution that led to the Americans with Disabilities Act of 1990, as well as the 2,008 Amendments Act, Title II and Title III of the FDA, and the Fair Housing Act, all which established a well grounded foundation for me to build upon during my life and my career. As you can see from me stepping into this role is not just a professional milestone, it's a personal mission.

Mark Grant
Mark Grant
President, CEO & Director at Lifeward

One that combines deep empathy with the drive for continuous innovation and operational discipline. My commitment is to ensure that we stay ahead of the market needs, expand access to our solutions, and deliver tangible lasting impact. Now let's move on some recent accomplishments. In Q2 twenty twenty five, revenue was $5,700,000 also reflecting a record quarter for ReWalk Medicare placements. As you remember in March, we achieved FDA clearance for our ReWalk seven Personal Exoskeleton, the latest innovation of ReWalk pipeline that introduces new features streamlined for accessibility and ease of use in everyday environments.

Mark Grant
Mark Grant
President, CEO & Director at Lifeward

Improved battery life, push button control, seamless stair curve activation, and cloud connectivity. To date, over 20 systems, over 20 ReWalk seven units have been installed in The US with an overwhelmingly positive feedback from both patients and therapists. We're currently in the final stages of attaining CE clearance for ReWalk seven and look forward to a similar response with our subsequent launch in Europe. On the operations side, we completed the transition to in house manufacturing of the ReWalk Personal Exoskeleton, delivering cost savings, improved quality control, and greater production flexibility. Additionally, as part of our consolidation efforts, we finalized the closure of our Alter G manufacturing facility in Fremont, California.

Mark Grant
Mark Grant
President, CEO & Director at Lifeward

In The US, we've continued to expand our payer base for the ReWalk Personal exoskeleton. Our partnership with CoreLife, a division of New Motion, has accelerated our lead pipeline and processing timelines for workers' compensation claims. We've also continued to work with the Medicare Administrative Contractors, the MACs, to achieve clarity on case submission requirements, and we received a recent ruling by administrative law judge affirming that ReWalk's personal exoskeleton is reasonable and necessary for medical beneficiaries. As a result of these and other achievements, we improved our quarterly cash burn to $3,900,000 down from $5,600,000 in Q2 twenty four, also $5,500,000 in Q2 twenty five, driven by operational efficiencies, facility consolidations, and other reduction initiatives. Now let me turn to our growth strategy, which is anchored in three core pillars that will drive sustained performance and long term value creation.

Mark Grant
Mark Grant
President, CEO & Director at Lifeward

The first pillar is accelerating commercial adoption. We're building on strong momentum from recent Medicare and commercial insurer wins by reducing approval times, expanding coverage, and scaling access globally. This effort is supported by four key levers: payer expansion, channel distribution, digital engagement, and strategic alliances. By pairing innovation market access strategies with process improvements in reimbursement and collections, we aim to speed order to cash cycles, improve DSOs, and convert demand into revenue more efficiently. The second pillar is portfolio diversification.

Mark Grant
Mark Grant
President, CEO & Director at Lifeward

We are leveraging software innovation, robust hardware, and AI integration to expand capabilities to deepen customer engagement. Our innovation focus is matched by disciplined execution, ensuring that our solutions are effective, intuitive, and accessible to the broadest patient base while remaining commercially viable at scale. The third is operational excellence. We're focused on driving margin improvement, deploying capital with rigor, accelerating cash conversion through greater efficiency and reimbursement and collections. Here in innovation means continuously refining our internal processes from manufacturing to revenue cycle management.

Mark Grant
Mark Grant
President, CEO & Director at Lifeward

These improvements are designed to extend our financial runway, enhance our profitability, ensure that growth translates into predictable timely revenue. One highlight and a clear glimpse of what's possible is the performance of our GnBH team in Germany. They're operating profitably, building a strong patient community and using their payer acceleration and market scale to move quickly in rolling out innovative new business models. These models blend accelerated commercial adoption through channel partnerships and distribution growth with disciplined execution and reimbursement, allowing faster order to cash and better DSO. At the same time, the team is expanding Alter G sales through targeted channel strategies and local market innovation, proving the value of our portfolio diversification approach.

Mark Grant
Mark Grant
President, CEO & Director at Lifeward

Operational excellence is evident in their ability to test, refine, and scale solutions rapidly, ensuring that works in Germany can also adapt for other global markets, including The United States. Germany has become our proving ground. Here we push the limits of delivery, integrate customer feedback quickly, and perfect strategies before broader rollout. This approach reinforces the strength of our three pillars, delivering tangible results today while chartering the course for sustainable profitable growth tomorrow. Lastly, know you've already heard from him, but I'm pleased to share earlier this week we appointed Ahmad Adar as LifeWorks Chief Financial Officer.

Mark Grant
Mark Grant
President, CEO & Director at Lifeward

Ahmad is no stranger to LifeWorks having served more than five years in senior finance roles within the company. Ahmad's proven track record here at LifeWorks gives me full confidence in his ability to strengthen performance, improve operating efficiency, and progress toward long term profitability. I'm looking forward to working closely with them to accelerate execution and unlock more of LifeWorks growth potential. Ahmad, welcome to your new role and over to you.

Almog Adar
Almog Adar
CFO at Lifeward

Thanks, Mark. I'm pleased to be speaking with you in my first week as LifeWorks Chief Financial Officer. Having spent more than five years in senior finance roles here, I have developed a deep understanding of our product, market and operations complemented by prior leadership experience outside LifeWorks. This combination enables me to contribute not only as a financial leader, but also as a strategic partner in guiding the company's direction. LifeWorld has a strong foundation and innovative product portfolio, a talented team, and a mission that is deeply meaningful to me, improving the quality of life for the people we serve.

Almog Adar
Almog Adar
CFO at Lifeward

As CFO, my focus will be on maintaining rigorous financial oversight, aligning resource with the highest impact opportunities, and managing our cash position prudently to support sustainable long term growth. With that, let's turn to our financial results for the quarter. As we review our results, I will cover both GAAP and non GAAP figures. The non GAAP results exclude the items detailed in the reconciliation tables in today's earnings release and in our view provide a clear picture of the company's underlying operating performance. I'm encouraging you to refer to the GAAP results and the reconciliation table.

Almog Adar
Almog Adar
CFO at Lifeward

As we go through the second quarter twenty twenty five financials, year over year, LifeWorks reported revenues of $5,700,000 in Q2 twenty twenty five compared to $6,700,000 in the 2024, a decrease of $1,000,000 or about 15%. Quarter over quarter, revenue increased approximately 14% from $5,000,000 in Q1 twenty twenty five, driven primarily by higher sales of ReWalk system in Germany. Now, let's break it down by product line on a year over year basis. Revenue from our traditional products and services, which include the ReWalk Personal exoskeleton, the MyoCycle SES spike and the ReStore exosuit totaled $2,500,000 in Q2 twenty twenty five compared to $3,100,000 in Q2 twenty twenty four, a decrease of about $600,000 or 19%. The prior year period, including about $700,000 of Medicare related revenue recognized for submissions made in 2023 and the 2024.

Almog Adar
Almog Adar
CFO at Lifeward

Excluding the one time revenue recognition in Q2 twenty twenty four, Medicare related sales grew year over year. We also continue to improve ReWalk sales, achieving our highest quarterly total of unit placed to Medicare beneficiaries since the schedule established in April 2024. Our pipeline of qualified leads continue to expand and advance with more cases moving into later stages of the claim processes positioning us for future conversion to sales. Revenue from AlterG products and services was $3,200,000 in Q2 twenty twenty five, down from $3,600,000 in Q2 twenty twenty four, primarily due to the timing of deliveries to international distributors. The pipeline of high probability leads remains strong and is expected to support higher deliveries in the second half of the year.

Almog Adar
Almog Adar
CFO at Lifeward

Across both product lines, our commercial pipeline remains healthy. For the ReWalk product line, we saw our third consecutive quarter of pipeline growth, ending the quarter with more than one third qualified leads in process in The U. S, reflecting an 86% increase in our active pipeline since Q3 twenty twenty four. In Germany, we had 46 leads in process at the quarter end, included 34 active rentals, which historically convert to sales within three to six months. For Altergy, we closed the quarter with 15 systems in backlog.

Almog Adar
Almog Adar
CFO at Lifeward

The high probability lead pipeline provides visibility into anticipated demand and we continue to focus on converting this lead into order. Moving to gross profit. In the 2025, our GAAP gross profit was $2,500,000 or 43.9 percent of revenue compared to $2,800,000 or 41.1% in the 2024. On a non GAAP basis, for the 2025, gross profit was $2,500,000 or 44% of revenue compared to $3,100,000 or 46.9% in the 2024. The year over year change in non GAAP margin primarily reflects the absence of a onetime benefit from Medicare related revenue recognized in last year's second quarter, for which the related cost has been recorded in prior periods.

Almog Adar
Almog Adar
CFO at Lifeward

GAAP operating expenses were $9,100,000 in the 2025 compared to $7,200,000 in the 2024. The increase was largely driven by 2,800,000 goodwill impairment charge triggered by a significant decline in our share price that created a gap between our market value and book value. This non cash charge has no impact on our liquidity or the ongoing operation performance of the business. On a non GAAP basis, adjusted operating expenses were $6,000,000 in the 2025 compared to $6,900,000 in the 2024. The decrease primarily reflects greater efficiency in reimbursement activities, improved efficiency in marketing and sales operation, and lower R and D spending after the completion of major development programs.

Almog Adar
Almog Adar
CFO at Lifeward

We expect this positive trend to continue into the 2025, supported by the ongoing impact of our efficiency measures. Our GAAP operating loss for the 2025 was $6,600,000 compared to $4,400,000 in the 2024. On a non GAAP basis, operating loss was $3,500,000 compared to $3,700,000 in the same period last year. We expect our quarterly operating loss to narrow further in the 2025 as sales volume continues to grow and efficiency measures take hold. We ended the 2025 with $5,100,000 in cash and cash equivalents and no debt, including approximately $1,200,000 in gross proceeds from our ATM facility and approximately $2,600,000 from our public offering completed during the quarter.

Almog Adar
Almog Adar
CFO at Lifeward

Our operating cash usage in the 2025 was $3,900,000 compared to $5,600,000 in the 2024 and $5,500,000 in the 2025. The improvement reflects the benefit of operational efficiencies and the closure of our Fremont facility. Our cash usage was still higher than expected due to two main factors. First, Medicare collection remains slower than anticipated. While we continue to submit claims and build our receivables, payments from Medicare administrative contractors are still not occurring on a regular cycle.

Almog Adar
Almog Adar
CFO at Lifeward

We are actively working with the MAX to improve processing times and expect to see progress in the 2025. Second, inventory increased due to our transition manufacturing following the conclusion of our agreement with Sanmina, which required us to secure long lead time components internally. In addition, we are simultaneously supporting production for both the ReWalk six and the ReWalk seven, as we await CE approval in Europe for the ReWalk seven. Over time, we expect inventory levels to decline and for this transition to drive improved gross margin and enhanced product quality. Based on our current plan, we remain a growing concern with sufficient cash to fund operation into the 2025.

Almog Adar
Almog Adar
CFO at Lifeward

We are considering both debt and equity opportunities to support our operations and growth plan, while implementing cost management plans to preserve resource and maintain focus on our core business. LifeWorld is resetting its full 2025 guidance under the new management team, focusing on revenue and non GAAP net loss is our key performance indicators. For 2025, the company now expects full year revenue in the range of $24,000,000 to $26,000,000 and the projected non GAAP net loss in the range of $12,000,000 to $14,000,000 While we have adjusted our near term outlook to reflect the current environment, our long term growth drivers remain firmly intact. We are executing with focused discipline to capture these opportunities and position the company for sustained value creation. With that, I would like to turn the call back to Mark for further remarks.

Mark Grant
Mark Grant
President, CEO & Director at Lifeward

Thank you, Ahmad. We're committed to setting expectations responsibly. While our long term opportunity remains significant, it's important to acknowledge that some revenue cycles in our markets are inherently extended, particularly those dependent on payer approvals and coverage decisions. At the same time, we are deliberately pacing our investments to preserve cash, sustain operational discipline, and support long term value creation. As a result, we expect to grow the next few quarters to be more gradual than some might anticipate.

Mark Grant
Mark Grant
President, CEO & Director at Lifeward

With meaningful acceleration weighted toward the back half of our strategic plan and beyond. This measured approach reflects disciplined execution, ensuring every step we take advances our mission, strengthens our financial foundation, and positions Lifeford for durable, profitable growth. As your new CEO, I bring a different kind of rigor, one shaped by a track record of transformative commercial execution, relentless innovation, and operational discipline. This approach will define how we operate, how we compete, and ultimately how we win. You should expect the same high standards I've consistently upheld, standards that our patients, providers, and shareholders rightly deserve.

Mark Grant
Mark Grant
President, CEO & Director at Lifeward

We remain committed to developing solutions that provide, restore, and enhance independence, confidence, and quality of life for the people we serve. I look forward to sharing our continued progress with you next quarter. In closing, I want to thank the employees, customers, shareholders for your ongoing trust and support. I'm confident that LifeWard is on the right path, one that balances bold innovation with disciplined patient centered execution. Operator, let's now open the line for questions.

Operator

We will now begin the question and answer session. First question is from Yale Jen, Laidlaw and Co.

Yale Jen
Senior MD & Senior Biotech Analyst at Laidlaw & Company

Good morning, and thanks for taking the questions. And Emma, congrats for being the new CFO. A couple quick ones here. The first one is in terms of the Medicare revenue for the quarter, I didn't hear any specific, maybe I missed it. Could you provide some colors on that?

Almog Adar
Almog Adar
CFO at Lifeward

Yes, sure. Thanks, first, Pierre. So, in Q2 twenty twenty four, we had a one time revenue recognition that's related to submissions that we made during 2023 and Q1 twenty twenty four. Approximately worth $700,000 So, as I explained, excluding this portion of one time item in Q2 twenty twenty four, we have a growth like for the original submission that we made in Q2 twenty twenty five compared to Q2 twenty twenty four for Medicare. And in addition, this is our highest quarterly revenues with the place joint with the CMS since we launched the plan.

Yale Jen
Senior MD & Senior Biotech Analyst at Laidlaw & Company

Okay, great. That's very helpful. And you mentioned there's a number for leads in The United States as well in German. Could you I'm not sure I catch that precisely. I thought that it was $1.30, but could you, you know, clarify that for me?

Mark Grant
Mark Grant
President, CEO & Director at Lifeward

Yeah. Thanks for the question. Yeah. The Medicare leads are greater than 130 right now, and the pipeline continues to build quarter over quarter. As you would imagine, as you've alluded to and as these questions are kind of digging into is the revenue is a bit lumpy just because we're still expanding the coverage and understanding the timing. But things continue to grow quarter over quarter.

Almog Adar
Almog Adar
CFO at Lifeward

I would add to that one third sorry? Yeah. We have more than one third and it's a combination. It's not only CMS, it's also workers' comp and VA opportunities. Correct.

Yale Jen
Senior MD & Senior Biotech Analyst at Laidlaw & Company

Okay, great. That's very helpful. Maybe then my last question, little bit in two parts. The first one is, is the current sort of tariff situation has any impact on you? And the second part of that is, given your guidance for the 2025 guidance, you were, you know, total, you will expect to grow, have the revenue, particularly in the rework side, have the highest so far in history, was something that you guys feel that achievable? And thanks for taking the questions.

Almog Adar
Almog Adar
CFO at Lifeward

Okay. So, related to your first question related to the tariff, we are not facing with issues with the tariff because our ReWalk exoskeleton is a medical device that has Exemptions. Exemptions, exactly. Thank you. Exemption.

Almog Adar
Almog Adar
CFO at Lifeward

And we are facing with some tariff situation with China and Taiwan for our Ultra G product, while we are working towards to find some solution here in The US, but the effect is immaterial at this stage for us. Related to the second question and the guidance update, yes, we are expecting some growth in ReWalk revenues also in Q3 and Q4 for the ReWalk product.

Yale Jen
Senior MD & Senior Biotech Analyst at Laidlaw & Company

Okay, great. That's very helpful. Again, thanks. Congrats for both of you, the new position. Thank you.

Mark Grant
Mark Grant
President, CEO & Director at Lifeward

Thank you. Thank you for the questions.

Operator

Next question is from Swayampakula Ramakanth, H. C. Wainwright.

Swayampakula Ramakanth
Managing Director & Senior Equity Analyst at H.C. Wainwright & Co.

Thank you. Thanks for taking my questions. Good morning, Mark and Alma. Congratulations to both of you for for your positions here. And, Mark, it's it's great.

Swayampakula Ramakanth
Managing Director & Senior Equity Analyst at H.C. Wainwright & Co.

It's nothing like having a personal interest, you know, when you're coming into a new position. So starting off, you were saying in the opening remarks about 20 units of ReWalk seven having placed since approval. So are these units primarily through Medicare, private payers, VA? I'm I'm just trying to see how how well distributed these 20 units are.

Mark Grant
Mark Grant
President, CEO & Director at Lifeward

Yeah. They're just that's a good question. They're distributed across all channels. But, we have a high focus on CMS Medicare.

Swayampakula Ramakanth
Managing Director & Senior Equity Analyst at H.C. Wainwright & Co.

Okay, and then regarding the ALJ ruling, how does it benefit? Does it help in the CMS processing? Does it improve on the timing? Does it improve on getting less number of questions and pushback from the CMS? How does that ALJ ruling really help you?

Mark Grant
Mark Grant
President, CEO & Director at Lifeward

Yeah, based on my previous experience, and I think you remember, I've managed hundreds of payer contracts and government contracts across the globe and thousands of variants. And so as ALJ decisions come forward, they do. They shape how the policies are written. They shape coverage determination. They also shape how the processes are actually built.

Mark Grant
Mark Grant
President, CEO & Director at Lifeward

And so it's been helpful to have those rulings, even though it's painful for patients and for everybody involved. It's an important process and step in how we secure our current coverage.

Swayampakula Ramakanth
Managing Director & Senior Equity Analyst at H.C. Wainwright & Co.

Okay. And then, on the reimbursement itself, you know, during that process, there was a lot of going back and forth on the dollar amount and whatnot. And now that you're introducing ReWalk seven, is the reimbursement dollar amount, has it gotten better because this is an advanced mission? Or you know, are trying to first make sure that you have more installations before worrying about reimbursement price?

Mark Grant
Mark Grant
President, CEO & Director at Lifeward

You know, that's actually a really unique question because the payment is differing across all payer channels, So whether that's workers' comp, whether it's VA, whether it's private, managed, or Medicare. And so for Medicare, the ReWalk six and ReWalk seven are the same ASP, but across the other payers, it's actually completely different. So we intend to expand the reimbursement over time as we bring additional innovation forward. But right now, as you alluded to, we're really trying to penetrate the market and understand all the payer environments. So I don't know that I have a comprehensive picture to be able to tell you that we could officially go change pricing right now.

Mark Grant
Mark Grant
President, CEO & Director at Lifeward

I think more it's about establishing this novel technology and making sure that it's got a forward solidified place in the marketplace.

Swayampakula Ramakanth
Managing Director & Senior Equity Analyst at H.C. Wainwright & Co.

Okay. Just a couple more. I'm sorry. I'm taking too much of your time there. On the AlterG commercialization, since quarter after quarter, we are seeing AlterG contribution getting better.

Swayampakula Ramakanth
Managing Director & Senior Equity Analyst at H.C. Wainwright & Co.

How do you what are your plans to ensure that you actually maintain that that sustainability of growth, you know, and what are the near term milestones for that to happen?

Mark Grant
Mark Grant
President, CEO & Director at Lifeward

Yeah, a couple of things, you know, one of which it's an exceptional product, right? So I actually had the chance to use it as I came on board. As I mentioned earlier in the call, I have a left leg deficiency and so it immediately picked up on that left leg deficiency to the point where they thought the system was off because I didn't disclose that I had actually had some previous surgeries. So I love the product. I could have used it in my therapy and healing along the way.

Mark Grant
Mark Grant
President, CEO & Director at Lifeward

There is a definite resurgence of growth that can happen with the UltraG product. We're looking at channel partners across the globe right now to figure out how to best expand that product. Also, we're looking at a renewed focus in how we actually go to market with it. It fits well within our portfolio, but our portfolio doesn't expand to all of the professional athletics and high school sports and elites. And so really having some hyper focus around those particular markets is important for us to do going forward.

Mark Grant
Mark Grant
President, CEO & Director at Lifeward

I think it's a really key part of our portfolio and I do see its acceleration as we go forward.

Swayampakula Ramakanth
Managing Director & Senior Equity Analyst at H.C. Wainwright & Co.

Okay. And then the last question is actually on the guidance and the margins. You know, the guidance came down a bit, obviously it's not huge numbers, but in general, you know, what's the thinking behind lowering the guidance stat bit? And then, Almog, as you said, you're bringing manufacturing in house. I know you said there was gonna be some impact on the inventory at the beginning, but overall, you know, what sort of margin expansion could we expect by bringing that in house?

Almog Adar
Almog Adar
CFO at Lifeward

Okay, so I will start first with the margin. So as you mentioned, we make a transition during Q2 from Salmena to our facility in York now. And this change brings with him a lot of efficiency and improvement from a lot of aspects. Some of them is in the margin area, some of them is quality area. So, we are expecting the margin to be improved for sure.

Almog Adar
Almog Adar
CFO at Lifeward

And I cannot provide right now number, but there is an improvement in terms of the margin. Then I'm any comments on sorry.

Mark Grant
Mark Grant
President, CEO & Director at Lifeward

I think it's important to notice we moved the facility internally. We took on quite a bit of inventory, which we didn't have on our books. This is actually going to impede the margin in the short term, but that will improve over time as well. So not only do we have value engineering in place to make sure that we actually improve the true COGS of the product, we also are just battling a little bit of inventory in the short term.

Almog Adar
Almog Adar
CFO at Lifeward

Yeah.

Almog Adar
Almog Adar
CFO at Lifeward

And then there is another reason to the inventory increase. Are right now delivering two products. In Germany, we are still providing the six and in The U. S. We are in the seven.

Almog Adar
Almog Adar
CFO at Lifeward

So we need to maintain parallel. Hopefully, during Q3 we'll get the CE approval and this will affect us to the inventory from this aspect. Related to your question to the guidance, can you remind me the question again? No, I'm just saying,

Swayampakula Ramakanth
Managing Director & Senior Equity Analyst at H.C. Wainwright & Co.

the reasoning behind lowering the guidance, you know, you know, at one level you're saying you expect better revenues going forward, you know, in the second half, but at the same time, you're kind of lowering the guidance. So is there something, you know, that you're concerned about?

Mark Grant
Mark Grant
President, CEO & Director at Lifeward

There's nothing we're concerned about. The trajectory of growth that was in the previous plan is just different, right? As we start to navigate all these different payers across the globe, the timing has not been what we've expected. As you can see from our numbers, the pipelines are growing, right? The products are expanding, the innovation is being approved, but the timing is something yet to be understood.

Mark Grant
Mark Grant
President, CEO & Director at Lifeward

Frankly, that's why I'm here. The expertise that I've had over the last twenty years of delivering in this exact environment is the rigor that I'm going to bring to hopefully speed this up. But I want to be realistic in my initial overview of the organization to set expectations correctly.

Swayampakula Ramakanth
Managing Director & Senior Equity Analyst at H.C. Wainwright & Co.

Thank you. Thank you, Mark and Almak, for taking all my questions.

Almog Adar
Almog Adar
CFO at Lifeward

Thank you. Thanks, Salke.

Operator

Next question is from Benjamin Haynor, Lake Street Capital Markets.

Almog Adar
Almog Adar
CFO at Lifeward

Good morning,

Ben Haynor
MD - Medical Technology Research at Lake Street Capital Markets

Thanks for taking the questions. First off for me, Mark, your experience, obviously great to see that ALJ decision, but just thinking kind of through that, I mean, know these things are kind of one offs individually, but does it take kind of a handful of these things to go your way? Is it more about a undefeated win rate or a high win rate to get people to kind of get the policies in place and make these things go more smoothly in the future? What really trips that trigger?

Mark Grant
Mark Grant
President, CEO & Director at Lifeward

Yeah. I'm definitely going to give you based on my experience because this market's a little different just from a size wise. But yeah, it's a heavy lift for everyone, right? So it brings people together to solution. And you're correct, you need to have a high hit rate.

Mark Grant
Mark Grant
President, CEO & Director at Lifeward

So the product needs to be the right patient at the right time. So both of those combined actually really work well. In this type of market, I don't actually think it takes a bunch because it's a heavy lift around everyone. My previous experience is it has not taken a lot of ALJ cases to bring everybody to the table. I think everybody just wants to make sure that we're spending the healthcare dollars appropriately.

Mark Grant
Mark Grant
President, CEO & Director at Lifeward

So I understand the process. I'm not a fan of it, but I understand And so I think your summary of it, know, no, it just takes a high win rate. We got to make sure we have the right patients and the right therapies. We need to actually go through the lift to get through to understand, you know, we have the right patients for the right technologies. And then as we do that, we can formulate the processes with the governing bodies as well as the private payers.

Ben Haynor
MD - Medical Technology Research at Lake Street Capital Markets

Okay, got it. And do you get the sense that folks are moving more closely to putting kind of a decision in place where it's just like, here's what we need and these are the criteria, or is that still a little bit amorphous?

Mark Grant
Mark Grant
President, CEO & Director at Lifeward

I'll give you one point and that's probably as far as I can elaborate is near term claims are being processed. The further out claims that we processed a long time ago are still in the works. So that would tell me that we're figuring it out both sides, right? Payer and internally here at LifeWard.

Ben Haynor
MD - Medical Technology Research at Lake Street Capital Markets

Okay, that's helpful color. And I appreciate the commentary on kind of the timelines not being nailed down completely yet. But maybe can you talk about to the extent that cost per pipeline addition, attrition in the pipeline, ultimate cost to successfully acquire a re walk patient, and then does timeline shortening hopefully over time, does that, in your view, ultimately impact kind of everything in that, the cost of the additions, the attrition and all that, all those sorts of metrics?

Mark Grant
Mark Grant
President, CEO & Director at Lifeward

Then I'll back up a step and then I'll attempt to answer the question. First for me, there's three areas that are core to the business. Access is key and that's across the patient and payer market. The next is innovation is really still our core, and we need to make sure that we capitalize on that by delivering a high quality product and moving on into next iterations. And then operational excellence, which is frankly where you're landing, that needs to be our fabric.

Mark Grant
Mark Grant
President, CEO & Director at Lifeward

So we're seeing the pipelines actually that you when you speak to attrition and everything else, I see this organization as a startup. The pipelines are growing. There's not a lot of attrition as we're finding the patients. What's actually we're trying to find is how do we find partners or build ourselves to make sure we can access all the payer needs. And so right now there's not a lot of attrition in the pipeline.

Mark Grant
Mark Grant
President, CEO & Director at Lifeward

What's happening is we actually need to pull these pipelines through and formalize the processes so it's cleaner. So there's not a lot of time for me to base on attrition metrics at this point. It's definitely something we should talk about in the future.

Ben Haynor
MD - Medical Technology Research at Lake Street Capital Markets

Okay, that's helpful. Fair enough. And then I appreciate the commentary on what you guys have going to Germany. What kind of needs to happen here in The US to duplicate some of the things, the positive things that you've seen in Germany?

Mark Grant
Mark Grant
President, CEO & Director at Lifeward

Yeah, so one is focused execution, right? So Alter G has a very specific call point in the sports arena, and we need to make sure that we're highly focused on that and getting back to those roots. Secondarily, the portfolio sale is really good. We have highly skilled clinical reps, so I'm comfortable with having to re walk in the Mylan products and AlterG in their portfolio. So, I think a focus effort here in The US.

Mark Grant
Mark Grant
President, CEO & Director at Lifeward

I think secondarily is we've got to find some different channel partners. I've been exploring some things out of my past and looking forward to make sure we're using the right delivery model. Ultimately, it's all about reach. We have excellent products. They're all under penetrated.

Mark Grant
Mark Grant
President, CEO & Director at Lifeward

They're all exceptional in quality. It's all about the reach penetration. So again, I'll go back to the four tenets, three tenets. Access is going to be key. It's across all portfolios.

Mark Grant
Mark Grant
President, CEO & Director at Lifeward

Our innovation, but not just picking on what it is today. They're great products. They're excellent in the marketplace, incredibly relevant and still forging paths with the best names. And then the operational excellence is just where it's coming down to. And I'm going to lean on that third one because that's the question you asked.

Mark Grant
Mark Grant
President, CEO & Director at Lifeward

It's really about the rigor and discipline that we take into the marketplace. That's actually what's required for us to excel.

Ben Haynor
MD - Medical Technology Research at Lake Street Capital Markets

Okay. Got it. And then lastly for me, just on the Mylan products and Ultra Qi. What is kind of embedded in the guidance for that? I mean, you expect growth from last year?

Mark Grant
Mark Grant
President, CEO & Director at Lifeward

We expect growth from last year on both product lines. Yes. Got it. Okay.

Ben Haynor
MD - Medical Technology Research at Lake Street Capital Markets

You. Yep. Thanks a lot, guys.

Operator

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

Mark Grant
Mark Grant
President, CEO & Director at Lifeward

Hey, if there are no more questions, we'll go ahead and conclude the call. I appreciate everybody's attendance today. Thank you, and we're looking forward to next quarter.

Executives
    • Almog Adar
      Almog Adar
      CFO
    • Mark Grant
      Mark Grant
      President, CEO & Director
Analysts
    • Yale Jen
      Senior MD & Senior Biotech Analyst at Laidlaw & Company
    • Swayampakula Ramakanth
      Managing Director & Senior Equity Analyst at H.C. Wainwright & Co.
    • Ben Haynor
      MD - Medical Technology Research at Lake Street Capital Markets
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