Lifeward Ltd (LFWD) 2017 Q2 法說會逐字稿

Good morning, ladies and gentlemen, and welcome to the Second Quarter 2017 ReWalk Robotics Ltd. Earnings Conference Call. (Operator Instructions) As a reminder, this conference call is being recorded. I would now like to turn the conference over to your host, Ms. Ilanit Allen.

Thank you, Matt. Good morning, and welcome to ReWalk Robotics' Second Quarter 2017 Earnings Call. This is Ilanit Allen of In-Site Communications, Investor Relations for ReWalk. With me on today's call are Larry Jasinski, Chief Executive Officer; and Kevin Hershberger, Chief Financial Officer of ReWalk. This morning, the company issued a press release detailing financial results for the 3 months ended June 30, 2017. This can be accessed through the Investor Relations section of the ReWalk website at rewalk.com, and you can also access the webcast of this call from there.

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 as defined by the Private Securities Litigation Reform Act. These forward-looking statements are based on information available to ReWalk management as of today and involve risks and uncertainties, including those noted in this morning's press release and ReWalk's 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. ReWalk specifically disclaims any intent or obligation to update these forward-looking statements, except as required by law.

A telephone replay of the call will be available shortly after completion of this call for the next 2 weeks. You'll find the dial-in information in today's press release. The archived webcast will be available for 1 year on the company's website, rewalk.com. For the benefit of those who may be listening to the replay or archived webcast, this call was held and recorded on August 3, 2017. Since then, ReWalk may have made announcements related to the topics discussed, so please reference the company's most recent press releases and SEC filings.

And with that, I'll like to turn the call over to ReWalk's CEO, Larry Jasinski.

Thank you, Ilanit. Good morning, everyone, and thank you for joining us. We had another strong quarter with 31 ReWalk systems placed, generating $2 million in revenue. And we've made meaningful progress advancing our key initiatives including insurance reimbursement coverage for the ReWalk personal device, expanding our global footprint and progressing our innovative soft suit exoskeleton technology designed for individual with stroke.

I'd like to highlight several key developments during the second quarter. I'll begin with an update on reimbursement. We continue to make progress with commercial payers, securing 11 positive case-by-case coverage decisions during the period. To date, 35 separate insurance carriers have provided coverage for a ReWalk system in the United States. Our pipeline has expanded to 217 pending insurance claims, which represent over $15 million of potential sales. With nearly 400 systems placed around the world, we believe the acceptance of the technology is becoming mainstream.

Securing regional and national coverage policies in the U.S. and Germany is a key strategic goal for ReWalk, one that we are vigorously pursuing. During the quarter, we completed a comprehensive policy review submission with a large commercial payer in the U.S. Our policy review focused heavily on an evidence based medicine methodology. In the defined hierarchy of medical evidence, the data provided meets to 1A and 1B level of proof. The information provided included: first, clinical data from 49 papers analyzing exoskeletons; second, a detailed meta-analysis of a large subset of studies from 14 peer review publications on 111 patients, which demonstrated an ability to walk with ReWalk at 3 miles per hour and cover a 98 meters in a 6 minutes' walk test. This data showed safe ambulation in real world settings conducive to prolonged use and known to yield health benefits; third, a review of the coverage policy by the U.S. Veterans Administration; fourth, a summary of independent appeals and core cases which ruled that the ReWalk is medically necessarily and no longer considered investigational or experimental; fifth, extensive data spanning 756 sessions demonstrating successful use without any safety issues in a full range of indoor and outdoor walking environments; and sixth, direct testimony from leading medical experts about the clinical experience and data in multiple centers, demonstrating the positive impact of exoskeleton use.

In 2014, when ReWalk was first approved, the scientific data was more limited, which resulted in an initial decision by insurers not to issue broad coverage policies. The rapid expansion of data over these last few years is substantial and we are very pleased with the depth and the quality of the data submitted. Review by the U.S. commercial payer I just referred to has been completed, and we expect a decision in 30 to 60 days following the review.

We continue to have a strong track record through the appeals process. We've recently announced a favorable court decision in Florida relates to several judicial decisions that support covering the individual after an original denial of a claim by a commercial insurer. In this particular case involving Blue Cross Blue Shield of Florida, the decision was based on a formal evidentiary hearing and expert testimony. The expert witness stated, "This technology now meets a common standard of medical practice," and is medically [necessary] treatment. The court concluded that coverage for the ReWalk for home use has been proven by the preponderance of the evidence. So the individual impacted by this decision has been given the opportunity to walk once again.

In over 80% of appeals that have been decided, independent experts have ruled in favor of coverage. We view the trend moving clearly in our favor.

With regards to the VA, our relationship remains strong. The VA continues to lead the world with high quality and effective research activities related to spinal cord injury. Its current 160-subject randomized co-op study has enrolled 32 patients to date and has another 16 in the pipeline. The study is accruing data and patients very effectively with active study centers and strong research leadership. As patients complete the study, they will become eligible to obtain their own systems through the clinical programs at the VA.

The implementation of the VA's standard operating procedure issued in December 2015 continues to be challenging. Nationwide, the VA has purchased 8 systems for veterans and 4 systems are in trials prior to purchase. The veterans that do not live near one of the designated co-op study centers are required to wait, as the VA continues to struggle to support execution of their official stated policy. There are 70 veterans, who have reached out to us, who are waiting for the VA to evaluate their request for a ReWalk. In some cases, the qualified veterans simply live too far away from a VA facility to be trained. And in some cases, the VA has rented systems for veterans, but has not resourced the training. So these veterans are forced to wait.

We know of many veterans are requesting and advocating for local training rather than waiting indefinitely for the VA. We are hopeful that the administration and the VA will allow these veterans to be trained near where they live at either a VA facility or local qualified centers. Giving veterans a choice of where to train so they can benefit from walking again is currently being discussed within the administration and the VA. We are hopeful that they will act on these requests from our veterans soon.

In Germany, we continue to make good progress with a large social health insurance provider and also with the workers compensation groups. As we discussed last quarter, we are in advanced discussions with a large social health insurance group, with which we have over 17 pending insurance claims. Additionally, the government body of the country's workers compensation groups, the BG, has expressed support for a policy, which we believe will be similar in scope to the VA's standard operating procedure, providing coverage to all workmen's comp patients. Final policy documents are anticipated in the coming months. The BG groups currently cover 28 pending insurance claims in Germany. In total, we have 131 pending claims in Germany. So we anticipate coverage decisions by leading groups will influence the other groups to follow the same pathway.

In the past 10 days, we have had 2 additional court decisions resulting in coverage of sale and a trial of ReWalkers for individuals. These decisions, combined with the 2 previous Social Court decisions, and our extensive discussion likely influence several additional pending cases. Overall, we believe reimbursement is moving in the right direction and that the extensive body of research on exoskeleton use will ultimately lead to broader coverage, both in the U.S. and abroad. These decisions will be important, not existing direct markets, but also for our current distributor markets and the new markets we enter as well.

During the second quarter, we were very pleased to announce that we partnered with Harmonie Medical Services in an exclusive agreement to facilitate distribution of ReWalk systems in France. Harmony is one of France's largest medical device providers and an ideal partner for ReWalk, as we've broaden our reach to include physicians, payers and the SCI community in France.

In the R&D front, we achieved an important milestone with our soft suit technology developed in collaboration with Harvard's Wyss Institute, unveiling the base design for the Restore system, our commercial product to treat stroke patients. A major peer reviewed scientific publication about the design and clinical experience with the Restore system was published on July 26 in Science Translational Medicine. The article is published by researchers at the Wyss Institute, Harvard University and Boston University. In the publication, the authors addressed the fundamental need and consideration for a system that can uniquely provide forward propulsion and ground clearance to facilitate more normal walking after a stroke, an evaluation of the potential of using the exosuit technology to restore healthy walking behavior in individuals after the stroke, the basic technical outline of our unobtrusive lightweight design and clinical experience showing an improvement in post stroke gait mechanics and energetics.

As we look to commercialize designs based on our work with the Wyss researchers, we continue to rely on leading physicians from key U.S. centers to assess the functionality, clinical study designs and training programs for centers. Reviews conducted during the second quarter provided a very positive assessment of the significant potential for this design, above and beyond any existing technology.

In addition to its very small size and light weight, physicians see clinical value in the real-time adjustability of the assistance provided to modify the gait pattern and the amount of force with each step the patient takes. The Restore system holds the potential to provide life-changing technology to a whole new class of patients facing mobility issues. Harvard's second study, utilizing the most recent design is expected to begin in Q4 followed by ReWalk's FDA studies beginning in the first half of 2018. We are targeting commercialization of the Restore in 2018. So this is an exciting time at ReWalk.

With a lot of momentum heading right into the second half of the year, our successes during and since the second quarter includes good progress on reimbursement with a favorable Blue Cross Blue Shield outcome in Florida and growth to 217 pending claims, 11 case-by-case decisions in the U.S. and Germany, extensive reviews and anticipated policy decisions from commercial insurers in the U.S. and Germany and advanced discussions with other regional and corporate providers in the U.S. We are motivated each day by the many individuals whose lives have improved because of our technology: the bride who walked down the aisle in her wedding gown with the ReWalk underneath, the doctor who returned to her practice standing up rather than in her chair and the police officer who ReWalks routinely and was recently promoted. As a company, we will remain focused on execution that we can deliver on our milestones and continue to improve on people's life.

With that, I'd like to turn the call over to Kevin to review our second quarter 2017 financial results.

Thanks, Larry. Q2 revenue was $2 million compared to $800,000 in the prior year quarter and included 11 favorable commercial coverage decisions, 5 in the U.S. and 6 in Germany. We placed a total of 31 units, of which 17 were in the U.S., including 8 for the VA study and 1 for a veteran under the SOP. 11 were in our direct markets in Europe and 3 in other markets. During the quarter, we had 11 new rent-to-purchase units placed and 6 previously rented units convert. We currently have 31 open trials, including 25 active rentals, and 6 claims that have completed their trial period and are waiting a final insurance decision. Gross margin improved to 37% for Q2 versus 10% in the prior year period, driven by the increase in volume, conversion of rental units and lower product costs.

Total operating expenses for the quarter were $6.1 million compared to $8.7 million in the prior year period. The reduction reflects our initiatives to reduce spending announced earlier this year and a onetime R&D charge recorded in Q2 2016 related to the licensing agreement with the Wyss Institute at Harvard University. Net loss for the quarter was $6.3 million compared to a net loss of $9.1 million in the second quarter of 2016. And finally, we ended Q2 with $16.3 million in cash.

During the quarter, we effectively utilized our ATM equity program, managed our operating expenses and worked with Kreos Capital on our credit facility to strengthen our balance sheet as we continue to focus on our critical milestones.

With that, I'd like to open the call for questions. Operator, please go ahead with the instructions.

(Operator Instructions) Your first question comes from the line of Matthew O'Brien with Jaffray.

This is JP, on for Matt. I wanted to first start with the Restore system. How do you think about commercializing that? Have you, do you want to give any details on the price points and gross margin there? Do you think you're going to hire additional reps? How quickly you can you ramp up manufacturing, things like that?

Okay. This is Larry. JP, thank you for joining us this morning. [To give you an idea] how we are looking at commercialization. We haven't established a final price point, but we've given it a great deal of thought so far. And it will be a magnitude quite a bit less than exoskeletons used for spinal cord injury, for example, because it's a less complex product. So we would expect it would be somewhere well under half or closer to a third perhaps of the price of those, but let's see what the market teaches us little bit. We do believe, it would be able to give what we would consider medical device margins in the 60%, 65% range as we have volume, so that's an important component as we finish production and have a good control of that. But the key for pricing in this is we believe the initial placement of the product will be something that can be profitable to a center. In other words, they buy the unit as capital equipment. But the reimbursement codes that they can already use in rehab centers will be sufficient to cover their cost, and they will have some level of reduced labor we believe involved with this as well. So this is going to be a very different component, as we can go into these centers and present this product as something that is not only great for their patients, but additive for them from a financial point of view. As to how we are going to do this, I'll break it into two. Functionality, in the field this fits well with our existing sales force, our existing trainers who already go into many of these centers. So we will be able to leverage our existing reps. And we will add reps as revenue grows. But that we can build on the infrastructure that the company has already developed. And then last, on the manufacturing, we are going to continue a philosophy that has worked very well for us. We already have our OEM manufacturer, setting the production lineup. We will do the study with our first commercial build, which is starting literally almost immediately in next few days. So we have got all the pieces in play for the plan that we're really set up about 1.5 years ago.

And how do you think about the kind of suit per rehab stroke center opportunity, right? Like I assume since it's already reimbursable and this code is already in place, that some of these centers that are at higher-volume ones can be buying multiples of these kind of soft suits. And then is there an option if the patient needs it or wants it that you can sell it to them and they can take it home? Or is it just going to be more of the rehab type setting?

Well, the answer to both of those -- the timing. The physicians that have come and looked at the product as we did a lot of work with that in Q2, would be -- have indicated they would use it in multiple patients and multiple areas. So yes, I think each center will buy several suits. The bigger centers will buy more, though the smaller centers may only buy a few. So there is a good component with it there. And does that answer your key question?

Yes. And then if the patient wants to purchase it outright for home use? Is that...

Yes, the initial labeled indication will be for rehab centers. But we do believe, it could have an application for home use and will, and that will be a second label indication we will pursue.

And then one last question for me on the VA side of things. Is there in terms of getting access to training, I guess it seems to be a bottleneck right now. Is there any way you can partner with the VA and you can go train the people maybe at home or sending some of these veterans to non-VA rehab centers to kind of ramp up the nonclinical study side of the VA?

Oh, we have worked very hard with the VA to provide as much support as they will accept. I think, but that's important in many centers are looking to do it, but they just haven't done the resourcing at this point. We are not a clinical provider. We can teach people on how to train, and we can assist them somewhat, but we don't directly do the training in our organization. So that is something that really belongs in the clinic. The reality is there is many, many good VAs that would like to train but the national policies just haven't expanded at this pace that individual VAs would like. And the other one is, there is a program within the VA called Choice program, where they will allow patients to train at qualified centers. And I will pick a specific city as an example, Denver presently doesn't have a VA that can do the training, but one of the best private centers in the United States right there in Denver, that if they can allow those patients to go over there to get trained, they wouldn't have to simply wait. So this type of program is something that we have gotten favorable reaction from some members in the VA as well as on Capitol Hill. And I think, it is going to be actively considered, and we are going to continue to advocate for it.

Your next question comes from the line of Kyle Rose with Canaccord.

Great. Can you hear me all right?

Yes. Good morning, Kyle.

So I wanted to follow-up on the stroke question quickly. You talked about the first iteration of the product, which it sounds like the launch in 2018 will be that rehabilitation center focused. And then near longer term you will pursue a label for personal use. Can you give us your expectations on timing for when we may see a personal device approved? And then secondly, how do you envision the I guess the cadence or the commercialization of the stroke product into the rehabilitation market over the course of the next 18 months?

Well the timing we've lined up primarily for the rehab but the expectation is the products to the rehab essentially is going to be the same or very, very similar to the one that would be used at home. The only difference will be sizing. We can size specific it or we don't have to provide as many foot plates or components for a home device. So what will really define the timing on the personal units will be the FDA trial. And we have not yet had a meeting with the FDA on what they will require. We believe that the risk factors for this are relatively low. So there will be a moderate number of patients with, I think, reasonable follow up. But I can't give you timing until I think after we have met with the FDA on that specific study. Our focus, right now, has been on the rehab study so far.

The cadence on this over time, we believe the Restore program is really a foundation for us. Just like the SCI product, that ReWalk is a foundation for spinal cord injury, this is going to wind up for many applications. And it is a question of how quickly we can get the labeling for the various indications and how many iterations of the device. In the 18-month cycle, you will primarily see the stroke product and began to see our efforts in MS and other areas. But from a revenue point of view, I think, that's probably where your question is, the bulk of our expect -- expansion will be in the rehab centers currently for the first year. We'll get to the personal units behind it, but I believe you will see a move towards MS and other applications pretty quickly as well.

Okay. I guess, is it fair to expect you have a similar commercialization pattern into the centers from a rehab perspective that we saw with the rehab unit, when it launched for spinal cord or for the SCI patients? I'm just trying to understand over the course of 2018, as you start launching into those centers, how we should think about the cadence of revenues?

Kyle, this as Kevin. I mean, I will start off here, I think, we would actually see -- would expect to see a more rapid adoption of this product. I mean, it's -- this is really something that is an unmet need out there, as the ReWalk was. But this is a much smaller device that they can put on -- get on and off of the stroke patients and get them up and get them walking much quicker. I mean, one of the things that Larry noted in his response -- or in his remarks earlier, is that one of the feedback and it's really an important feedback that we got from a physician, is that were able to modify the walking pattern and walking speed for a patient in a real-time setting, while they were using the device, as we were working with the physician to preview the device. So I think it really gives the centers a lot of opportunity to get in and provide a better treatment. And as Larry noted, I mean, it's also economically advantageous to the centers because they have existing reimbursement. And this also allows them to reduce staffing or treat more patients in a certain period of time.

And I'd add to that, the things that make it easier for us to have a faster penetration, our internal structure of the team, that took a lot of time to build, to have a service and training and sales team, that team is in place. The other factors that, I'd add to what Kevin said, is the number of labs between the U.S. and the EU, there is over 4,000 potential sites, that we could go into and provide this technology and that's a much greater number as spinal cord injury tends to be much more specialized while stroke occurs everywhere. The third one is the number of patients, the numbers of patients here are dramatically larger than what we saw with the spinal cord injury. And then fourth, as Kevin alluded to, the economics. We have a very favorable statement to be able to make at the very beginning when we go into the labs.

Great. Then just last question from me, is just the business in -- in international markets excluding Europe. Second quarter, we have seen the low unit volume or I guess no unit volume. I know there were some big orders towards the back half of '16. But just wondering how we should think about that for the second half of '17, just as far pacing of unit placements from that perspective?

Well, there's always some ebb and flow. We tend to get some larger orders out of those groups, but we can't always predict their timing. So we have some tenders out there, which can improve fast, and we have some other funding decisions. But it is reasonable to expect we will have some of them. Unfortunately, I can't give as to when it is going to come because they can't tell us entirely.

Your next question comes from the line of Christian Moore with Jefferies.

Maybe the first one just on the cadence of the VA. Sounded like you're a little more frustrated than you have been in the past with the uptick of their orders there. What are your expectations for the back half of the year? It's our understanding that the 28 orders that you have done so far for the research unit have all been placed now so is that zero for the rest of the year? And then do you see any sequential uptick in key units that will be placed?

Well, our expectation there is, again, I will continue to say the research of the VA is fabulous, and there's a lot of people in the VA that want to place these, they just haven't supported it well, and we are frustrated with it. But for the back half of the year, the study still echoes a little bit. In other words, the 32 patients that already have a system, some of these are going to convert. So that will pick up some of our numbers in the back half. But many of them will land in early 2018, depending on the timing. For the patients that entered the study, once they are up and running, it is basically a 4 month process. So at the end of the 4 months, they will then come and apply to get it the system for the patients who want it. So that will affect us a little bit in a positive way in the back half of the year. And on the SOP relative to the choice and training and resourcing. There are people in the VA and certainly people in the administration that are saying they want to change this. Now will that wind up affecting us heavily this year? I don't know. We have these discussions and we have seen veterans being much more active than us, literally going to the Hill and other representatives and the VA asking for help. They have been listening to them, and I think at some point the VA will react to them. The VA just moves very slowly. And that is why you hear the frustration from us, because we don't really want to be the complaint center for those group of patients. We'd rather just be helping them get the product.

Great. And then maybe one on the backlog progression that you are seeing. I think, it is a strong number of 217 insurance claims pursuing. You mentioned over $15 million in the backlog. How many incremental qualified leads were those generated from at the higher level before an insurance claim? If that's the number you are still tracking?

We do, I mean, Christian this is Kevin. We generated in the quarter 183 qualified leads. But as we've said in the past a lot of those pending claims come from a period of time, so they may date back for a quarter or even 2 quarters or 3 quarters to leads that we generated at that point in time. So it is really hard to correlate leads versus a leads leading directly into qualified or into pending reimbursement claims. The other thing that is important to note is that as our businesses has grown, we don't really track, we still track qualified leads but the business has developed to a certain point where we are getting a lot more referrals from physicians and centers. And they do get qualified in the qualified leads number. But they actually run through the process quicker if they come through that process.

I'd add two things, so Christian to think about that. The claims that we have if we get the success that we anticipate the timing to be determined on getting a policy for these. It is going to have 2 impacts, the 217 or whatever the number will be at the time that are waiting, they will have a quicker path. So that will lower the lag time or the waiting time for those individuals, which will decrease some of our numbers at one level. But I really believe that we're going to see an increase overall in numbers, because something else is going to change. We have a lot of physicians and a lot of individuals that don't even enter the process right now, because until they believe they can get paid, get the unit paid for they don't want to fight the battle. So what I anticipate with some coverage decisions, you are going to see one thing pushing the number down and something else pushing it up. And the number is more likely to go up more than it's going to go down in a positive way.

Yes. So if I'm understanding it correctly, it seems like that the cadence has changed from getting a ton of incremental qualified leads to a number much smaller actual pending insurance claims for that kind of turning over and having more insurance claims that you are pursuing and those qualified leads being in the backlog for a shorter period of time. Is that correct?

That would be fair. Yes. We'll take a lead anytime we can get it, but other than that our emphasis is more on the RFAs.

Great. And last one for me is just that, I get that you mentioned 6 previous rental units converted, but I just missed the number on the actual rental units placed in the quarter. And if you could break that out by U.S. and EU, it would be very helpful.

Yes. So Christian, this is Kevin. We had 11 new rent-to- purchase units placed. 2 were in the U.S. including 1 with the VA and 9 were in Europe.

What's that?

No, I was just saying, I mean, the U.S. commercial payers are not as inclined. We're seeing more request for trials in Germany than we do in the U.S. At this point in time at least.

Your next question comes from the line of Steven Lichtman with Oppenheimer.

The submission you've made in the U.S. with the large insurer and the work you described in Germany, are these different pairs than what you've mentioned in the past in terms of sort of the mid '17 target? Or are they the same? And why has the time line maybe slipped a little bit here? Are they are just looking for just some more data points? I just want to compare and contrast that with what you have mentioned before in terms of the large insurer discussions.

Well, these are the groups that we have been talking to for quite some time. So I think that's a positive in terms of the level of engagement that each of these groups have gone through. On the time line side, yes, they are going a little slower than we want, which I think, the nature of these very large organization. But what we see and the reason we expect at least get to conclusions even though we can't definitively forecast the conclusions, they have really engaged and paid attention and are taking it through multiple levels in their organizations. So we anticipate still that we will see some here in the U.S. in roughly the 60-day cycle, we'll have a decision. I can't guarantee what the decision will be.

And in Germany, I think they are really at a decision point and we are speaking more about the contracts in those groups, and have been negotiating and developing contracts. So I think Germany is ahead of the U.S. right now. But both are progressing. We have put as much data in front of these groups as we put in front of the FDA for the original submission, it's been that kind of process.

That's great. And Larry, if you could with the German groups, can you scale for us about how large in terms covered lives or anything that you can provide in terms of the opportunity if those 2 do provide coverage in the coming weeks or months?

Well, the 2 in the Germany groups, 1 we've publically identified, it's the BG, which covers all workman compensation in Germany, which I have to dig to get the actual number of covered lives. But it is basically any German who is injured on the job in a country of 80 million people. So we will see if we can grab that number for you if they got it published anywhere. Relative to the SHI or the Social Health Insurance Group, that's broken out to more groups. But we are speaking to one of the 5 biggest, and we believe they will probably influence the others once we will get the contract completed with them.

Okay, great. And then just lastly on the soft suit. I think, you've mentioned that you're going to be in discussions with FDA on pathway there. When do you think the trial starts? Does it start up this year or perhaps early next year?

Well, there is 2 trials. One is not ours, one is done by Harvard. So Harvard is going to utilize the commercial design in a study within their own IRB at the centers in which they work. And they plan on doing that in Q4. We are working with the FDA and setting up our centers during Q4. But we don't anticipate we will treat any patients until sometime after the first of the year, depending on submission cycle, the IRB approvals, and all those kinds of activities. So -- but you should see patients in both studies active by the end of first quarter [cut] cycle.

Your next question coming from the line of Matt Taylor with Barclays.

This is actually Ian Xuyang, on for Matt. Can you hear me, okay?

Yes, we can. Good morning to you.

I wanted to follow up on one of Steve's questions. On the large U.S. insurer, have they described any specific areas of pushback that you are actively working to address? Or is this more of just a process, sort of paperwork question at this point? And I have 1 follow-up.

It's been more of a process question. They certainly, we spend an extensive amount of time going through things that were in the original policy decision issued shortly after the FDA clearance and how things have changed. And they came back with a number of clarification type questions, but not questions of significant challenges. They just okay, that helps us, we understand. Because there was just so much new data, that they didn't have, wasn't available in 2014. So they haven't really given us specific flags or concerns, we gave them a lot of data, which meets -- that I used some of the type of coding than what we had that met the medical hierarchy of the evidence-based medicine rather well. I anticipate our questions will come in a contracts stage, if we get to it, that is what we've experienced in Germany. And that is more mechanics, what do we do if they're not using it, how much do they use it, what is the price, things like that.

Got you. All right, that is helpful. And I wanted to ask about competitive dynamics. Did you see any additional pressure in the rehab space this quarter, either in the U.S. or OUS or no real change?

I would say no real change. I mean we are still probably the most active of the companies, certainly in placements and numbers in the clinics. We see a couple of good competitors, one particularly in the rehab space that has done a good job. But generally, I would like to see us all succeed to build this industry. But I don't see it impacting our direction at all at this point in terms we are not running into each other.

I'm showing no further questions at this time. I would now like to turn the conference back to Larry Jasinski.

Okay. Well good morning, everybody. We appreciate the time you've have taken. Thank you for joining us. And have a great day. We look forward to talking to you again in 3 months or before.

Ladies and gentlemen, this concludes today's conference. Thank you for your participation, and have a wonderful day. You may all disconnect.