Lifeward Ltd. Annual Report Summary

This summary offers a concise overview of Lifeward Ltd.'s latest annual report, highlighting key aspects essential for understanding the company's operations, financial health, and future outlook.

1. Business Overview

Lifeward Ltd. is a specialized medical device company that develops and commercializes innovative solutions for neurological disorders, particularly in epilepsy monitoring and treatment. Its flagship product, the "NeuroSense" wearable device, provides patients with real-time data and alerts, complemented by a cloud-based analytics platform for healthcare providers. The company's broad global footprint across the US, Europe, and Asia Pacific regions helps diversify market risk.

Lifeward operates within a dynamic market shaped by several key trends:

• Aging Population and Neurological Disorder Prevalence: The increasing global prevalence of neurological disorders, especially epilepsy, due to an aging population, creates a growing market opportunity for Lifeward's products.
• Telemedicine and Remote Monitoring Trends: The accelerating adoption of telemedicine and remote patient monitoring solutions, spurred by technological advancements and healthcare policy shifts, strongly aligns with Lifeward's wearable device and data platform strategy.
• Data Privacy Regulations: Evolving global data privacy regulations (e.g., GDPR, HIPAA) mandate continuous compliance and investment in data security, which could increase operational costs.
• Healthcare Reimbursement Policies: Changes in government and private insurance reimbursement policies for medical devices and remote monitoring services can significantly impact Lifeward's revenue and profitability. Favorable policy changes could provide a tailwind, while restrictive changes could create a headwind.

2. Financial Performance

For the fiscal year ended December 31, 2025, Lifeward achieved total revenue of $28.5 million, a substantial 22% increase from $23.4 million in 2024. This growth primarily stemmed from increased NeuroSense device sales and subscription revenue from its analytics platform. Specifically, NeuroSense device sales rose 15%, thanks to expanded insurance coverage and successful clinical trial results. Deferred revenue also contributed to growth, with $1.4 million recognized in 2025 from the prior year's balance.

Despite revenue growth, the company posted a net loss of $12.1 million for 2025, an improvement over a net loss of $15.8 million in 2024, reflecting ongoing investment in research and development (R&D) and sales and marketing. The gross profit margin rose to 65% in 2025 from 60% in 2024, due to improved production efficiencies. Diluted Earnings Per Share (EPS) stood at -$0.75 for 2025, compared to -$1.10 in 2024 (all per-share amounts adjusted for reverse stock splits).

Lifeward's shares underwent reverse stock splits: a one-for-seven reverse share split on March 15, 2024, and another one-for-twelve reverse share split on February 24, 2026 (after the 2025 fiscal year). The company adjusted all share and per-share amounts in the financial statements to reflect these changes. Lifeward also raised capital during 2025, securing $20 million through various offerings. This increased the total number of shares outstanding by approximately 15% during the year. Customer concentration remains a key factor, with the top three customers representing 35% of total sales revenue and 40% of accounts receivable at year-end 2025.

3. Risk Factors

Key risks that could impact Lifeward's business and stock price include:

• Stock Dilution from Offerings and Warrants: The company raised capital by selling new shares in 2025, increasing shares outstanding by 15%. Additionally, over 10 million outstanding warrants (post-split adjustment) pose a risk of further dilution if exercised.
• Impact of Reverse Stock Splits: While intended to boost per-share price and maintain listing compliance, the market sometimes views reverse stock splits negatively, potentially signaling underlying financial challenges or a lack of investor confidence.
• Customer Concentration Risk: Reliance on a few major customers (top three account for 35% of revenue) means a reduction in business from any of these could significantly impact revenue and profitability.
• Debt Obligations: The $5.0 million secured promissory note with Oramed Ltd. is a debt obligation Lifeward must manage and repay. It matures in June 2027.
• Regulatory Approval and Reimbursement Risk: As a medical device company, Lifeward depends heavily on obtaining and maintaining regulatory approvals (e.g., FDA, CE Mark) and securing favorable reimbursement policies from insurance providers. Delays or changes in these areas can severely impact sales.
• Competition and Technological Obsolescence: The neurological device market is highly competitive. Failure to continuously innovate or adapt to new technologies may result in market share loss to larger, more established players or innovative startups.

4. Management Discussion

Lifeward's management emphasized strategic growth and financial stabilization during 2025. The leadership team remained largely stable, with the appointment of Dr. Elena Petrova as Chief Medical Officer in July 2025, which signals a stronger focus on clinical development.

Key highlights and strategic moves for the year included:

• Strong Revenue Growth: A 22% increase in revenue to $28.5 million demonstrates growing market acceptance for the NeuroSense device and platform.
• Expanded Market Access: The company secured reimbursement coverage for NeuroSense in three additional US states and obtained regulatory approval for sales in Canada, broadening its addressable market.
• Successful Capital Raising: Lifeward raised $20 million through various offerings, securing necessary financing for operations, research, and growth initiatives.
• Product Development Milestone: Lifeward completed Phase 2 clinical trials for its next-generation NeuroSense device, showing promising results for enhanced predictive capabilities.

Challenges addressed by management included:

• Continued Net Losses: Despite revenue growth, the company remains unprofitable due to high operational costs associated with R&D and market expansion. Management aims to achieve profitability in the future.
• Reverse Stock Splits: The reverse stock splits in 2024 and early 2026 were strategic decisions to maintain stock exchange listing requirements and improve market perception of the share price.
• Intense Competition: The medical device market for neurological disorders is highly competitive, demanding continuous innovation and substantial marketing investment to maintain market position.

The company's strategic focus for 2025 centered on market penetration, advancing product innovation, and achieving financial stability through active capital raising.

5. Financial Health

Lifeward concluded 2025 with $18.2 million in cash and cash equivalents, a substantial increase from $5.5 million at the end of 2024, primarily due to the capital raised during the year. Its working capital (current assets minus current liabilities) rose to $10.5 million from a deficit of $2.1 million, significantly enhancing its ability to meet short-term obligations (liquidity).

The company holds a secured promissory note with Oramed Ltd. for $5.0 million, maturing in June 2027, with an annual interest rate of 8%. This represents a manageable debt obligation. Its debt-to-equity ratio is approximately 0.35, a level generally considered healthy.

The presence of various warrants also impacts financial health. While no warrants were exercised during the twelve months ended December 31, 2025, the existence of over 10 million outstanding warrants (post-split adjustment) creates potential for future share dilution if these warrants are exercised.

6. Future Outlook

Lifeward projects revenue growth of 18-25% for fiscal year 2026, fueled by continued NeuroSense adoption and the anticipated launch of its next-generation device in late 2026, pending regulatory approvals. The company plans to continue significant R&D investment, projecting expenditures of $8-10 million in 2026. Management anticipates reaching cash flow positive status by late 2027.

A significant event already in effect is the one-for-twelve reverse share split that became effective on February 24, 2026. This action significantly reduced the number of outstanding shares and increased the per-share price, aimed at improving market perception and maintaining Nasdaq listing compliance. Management also plans to explore strategic partnerships to accelerate market access in emerging economies.

7. Competitive Position

Lifeward asserts its leadership in non-invasive, real-time epilepsy monitoring. Its key competitive advantages include:

• Proprietary Technology: The NeuroSense device offers unique data collection and analysis capabilities that set it apart from traditional monitoring methods.
• Ease of Use: Designed for patient comfort and home use, which reduces the need for lengthy hospital stays.
• Data Analytics Platform: Its cloud-based platform provides valuable insights for healthcare providers, enhancing patient management.

However, the company contends with strong competition from established medical device companies offering alternative monitoring solutions (e.g., traditional EEG systems, other wearable sensors) and pharmaceutical companies developing new drug therapies. Key competitors include Medtronic, LivaNova, and smaller specialized startups. Lifeward's broad geographic reach across the US, Europe, and Asia Pacific allows it to tap into diverse markets and potentially diversify revenue streams, though this also requires navigating varied regulatory landscapes.