Israel’s ReWalk Robotics, the developer of a robotic exoskeleton system that helps paraplegics walk and climb stairs, said it has bought California-based AlterG for $19 million, to expand its rehabilitation technology footprint and achieve its goal of profitability.
The Yokne’am-based medical device company said the cash acquisition is expected to enlarge its offering to a wider market and is projected to boost its revenue growth and improve its operating margin, while reducing its cash burn rate.
AlterG is the maker of an anti-gravity treadmill that inflates from the waist down using patented differential air pressure (DAP) technology, originally developed for NASA, for the physical and neurological rehabilitation of athletes and patients following orthopedic injury or surgery.
The combined company, which is expected to generate trailing 12-month revenue of about $26 million, will focus on commercial sales for clinics and hospitals,
as well as sales of the medical devices to individuals for use in the home through
potential for more patient referrals.
Founded in 2001, the ReWalk Robotics’ exoskeleton system was invented by Dr. Amit Goffer, an Israeli entrepreneur and engineer who became a quadriplegic because of a spinal cord injury sustained in a car crash in 1997. Through his own personal experience in utilizing mobility devices for people with spinal cord injuries, Goffer developed the ReWalk device that helps people paralyzed from the waist down, to stand and walk.
The ReWalk battery-powered system, the first exoskeleton cleared by the US Food and Drug Administration (FDA) for rehabilitation and personal use, consists of leg braces with motion sensors and motorized hip and knee joints that respond to subtle changes in upper-body movement and shifts in balance. ReStore, the second product developed by ReWalk, aims to help rehabilitate individuals with lower limb disability due to stroke so that they can regain their ability to walk.
“This transaction is truly transformative for ReWalk and is a milestone in our long-term strategy for growth from both our existing portfolio of products and from synergistic acquisitions,” said ReWalk CEO Larry Jasinski. “We believe this transaction will leverage our combined market presence from both businesses and, by creating sales and support efficiencies across all product lines, accelerate our path to profitability.”
“Through this transaction, we believe we will create a formidable commercial infrastructure to support multiple additional products across the continuum of care from the clinic to the home,” said Jasinski.
In the second quarter of this year, ReWalk Robotics reported a net loss of $4.6 million compared to a loss of $4.4 million during the same period in 2022, the company said on Aug. 11. Total revenue declined to $1.3 million from $1.6 million posted during the second quarter of 2022, mainly due to a lower number of ReWalk personal devices sold in the US and Europe, the company said. AlterG generated revenue of $20 million in fiscal year 2022 with positive operating profit.
Going forward, Jasinski said, the Nasdaq-listed company is seeking to expand access in the US market to reimbursement coverage for personal exoskeletons, which are very costly. The loss-making firm said it expects to post positive non-GAAP operating profit and free cash flow by 2026.
“With regard to reimbursement, we have seen Medicare propose a rule which would explicitly include personal exoskeletons within an established benefit category, and thus facilitate coverage and payment for qualified Medicare beneficiaries,” said Jasinski.
More than 600 ReWalk Personal Exoskeleton systems have been installed worldwide, with nearly 200 systems having been provided by third party payors including the US Department of Veterans Affairs, private insurers, and German statutory and private payers. ReWalk has operations in the US, Israel, and Germany. About 6,000 of AlterG’s anti-gravity treadmills are deployed in over 4,000 clinics around the world.