Israeli company ReWalk Robotics Ltd.(Nasdaq:RWLK), which has developed a robotic system that helps people with paralyzed limbs to walk erect, yesterday published partial financial results for the third quarter, together with a shelf prospectus for a secondary offering. The company's share price plunged 11% on the news, and is now traded at $3.30. The company has now lost 63% of its value in the IPO two years ago, and 86% of its value since the peak following the IPO. ReWalk, which had $12.4 million in cash at the end of the third quarter, will offer 3,250,000 units at a price to the public of $3.75 per unit. Each unit consists of one ordinary share of the company and 0.75 of a warrant to purchase one ordinary share with an exercise price of $4.75. All of the units in the offering are to be sold by ReWalk. The ordinary shares and the warrants will be immediately separable and issued separately, but will be purchased together in the offering. The proceeds of the offering will thus total $12.2 million, plus a further $11.6 million if all the warrants are exercised.
Oppenheimer & Co. Inc. is acting as sole underwriter for the offering. ReWalk has granted the underwriter a 30-day option to purchase up to 487,500 units sold in the public offering on the same terms and conditions. The offering is expected to close on November 1, 2016, subject to customary closing conditions.
Barriers: Reimbursement and ease of use
ReWalk is a good example of a company with a medical device that many agree is important and revolutionary, but when the time comes to pay for it, things are not so smooth. The main barriers in the way of more rapid penetration of the market by the company are the rate of reimbursement and the ease of using the product. The company posted $1.4 million in revenue and installed 23 systems in the third quarter. It raised its revenue guidance to $1.3 million, but this is not enough to impress the market. The company's revenue totaled $800,000 in the second quarter, when it switched from a model of selling systems to a leasing model with a gradual transition to a purchase in order to increase the number of people trying its products.
The company must achieve $1.5 million sales in the fourth quarter in order to meet its $6.2-7 million sales guidance for the year. The company's figures also show that insurance reimbursement was obtained for 13 of the 23 systems sold in the third quarter, a lower proportion than the company achieved in the preceding quarter. Some of the systems sold were purchased by the US Veterans Administration for a clinical trial.
ReWalk is trying to increase its insurance reimbursement by conducting trials showing improvement in the quality of life and health of those using the device. In addition to the US market, the company is now trying to obtain reimbursement for the product from a leading insurer in the German market. Its next generation product, which is designed for easier use, is scheduled to be ready to begin the approval process in mid-2017. The company is also developing new products for supporting walking by stroke and multiple sclerosis patients who are not completely paralyzed, but who suffer from limited mobility. This product is meant to be small and soft, and will probably be cheaper than the existing product.
Published by Globes [online], Israel business news - www.globes-online.com - on October 27, 2016
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