Israeli medical device company ReWalk Robotics Ltd. has announced that it has completed the acquisition of AlterG Inc., a rival company which provides anti-gravity systems for use in physical and neurological rehabilitation. ReWalk, which in recent quarters has suffered from stagnation in activities and falling profitability designs and develops powered solutions that provide gait training and mobility for lower limb disabilities.
ReWalk will pay $19 million for AlterG, which has annual revenue of $20 million and will according to ReWalk will contribute immediately to its profitability. As part of the deal, AlterG will receive 655 of its growth in activities in the two years after the completion of the deal.
Following the announcement on Thursday, ReWalk's share price jumped 11% but fell back 1.88% on Friday to $0.7045, giving a market cap of $41.968 million.
ReWalk CEO Larry Jasinski said that AlterG's product was originally developed by NASA to help astronauts cope with the lack of gravity.
ReWalk had revenue of about $2.6 million in the first half of 2023 and an operating loss of $5.7 million. Both revenue and profitability were on a slight downward trend. In June, the company received good news regarding progress in obtaining health insurance indemnity for its products, and its share price rose 30%. Medtech Insight website estimates that after the acquisition, the companies will register a combined annual revenue of $26 million.
How did you succeed in acquiring the company in these circumstances?
Jeff Dykan chairman and partner of SCP Vitalife, which invested in ReWalk when it was an early stage company said, 'AlterG was founded in 2005. It is a company based on venture capital that sought an exit and it was a bit difficult for them during the Covid pandemic. We have been talking with them for years. At the same time we held several financing rounds between 2018 and 2020, so we reached the current period with cash. They did not have enough cash to let them grow."
In ReWalk's second quarter financial results the company reported having $58 million cash before the deal.
Both ReWalk and AlterG's products are directed to the same target markets of doctors and physical therapists in rehabilitation clinics, and Alter G's product is already installed in 4,000 such clinics, so it opens doors for ReWalk and its original product.
After the transaction, AlterG's VP Sales, Charles Remsberg, will join ReWalk. Finding the right person to lead marketing and sales is one of the biggest challenges for Israeli companies operating in the US market, and ReWalk believes that Remsberg has the necessary experience to take the products, including its original products, forward.
Jasinski said, "Thanks to this acquisition, we will reduce our burn rate in 2024-2025, and hope to break even in 2026, without the need to raise more capital for that. If we raise more, it will only be for expansion. This forecast is based on the existing products of ours, and both companies have a pipeline of new products."
Published by Globes, Israel business news - en.globes.co.il - on August 13, 2023.
© Copyright of Globes Publisher Itonut (1983) Ltd., 2023.