10-K: DIH Holding US Reports FY25 Loss Amid Reorganization Delays

DIH Holding US, a global provider of robotic rehabilitation devices, reported a net loss of $8.7 million for fiscal year 2025, alongside ongoing corporate reorganization challenges and Nasdaq delisting notices.

Summary

• DIH Holding US, Inc. (DHAI) is a global provider of advanced robotic devices for physical rehabilitation, focusing on visual stimulation and interactive training for patients with walking impairments, reduced balance, and impaired arm/hand functions.
• The company reported a net loss of $8.7 million for fiscal year 2025, a slight increase from $8.4 million in fiscal year 2024.
• Revenue for fiscal year 2025 was $62.9 million, a 2.5% decrease from $64.5 million in fiscal year 2024, primarily due to a shift in product mix towards lower-priced devices, partially offset by a 10% price increase implemented in fiscal year 2024.
• Gross profit increased by $2.4 million (8.2%) in fiscal year 2025, driven by the price increase and lower cost of sales.
• Operating expenses, excluding impairment, rose by $4.7 million due to higher professional and personnel costs associated with operating as a public company.
• An impairment charge of $2.2 million was recorded in fiscal year 2025 for the discontinuation of the SafeGait product and HocoNet-related software.
• The company had cash and cash equivalents of $1.9 million as of March 31, 2025, and an accumulated deficit of $43.9 million.
• Negative cash flows from operating activities amounted to $4.1 million in fiscal year 2025, compared to positive cash flows of $5.2 million in fiscal year 2024.
• A one-for-twenty-five reverse stock split was effected on October 17, 2025, with trading on a split-adjusted basis commencing October 20, 2025.
• The planned corporate reorganization, which includes the transfer of Motek Group and Hocoma AG ownership to DIH Holding US, Inc., has not been completed due to a lien on DIH Hong Kong related to DIH China.
• DIH has received multiple Nasdaq deficiency notices for failing to meet listing requirements, including market value, public float, and minimum bid price standards, and for delinquent periodic reports, leading to delisting risk.
• The company issued $3.3 million in principal amount of 8% original-issue-discount senior secured convertible debentures in June 2024, and an additional $330,000 in March 2025, with further debentures issued in August 2025.
• An equity offering in February 2025 raised net proceeds of approximately $3.9 million through the sale of 237,484 units, each consisting of one common stock share and one Class A warrant.

Sentiment

Score: 3

Explanation: The company faces significant financial challenges, including recurring losses, negative operating cash flow, and an accumulated deficit, leading to substantial doubt about its going concern ability. While it has raised capital and operates in a growing market, operational issues like incomplete reorganization and internal control weaknesses, coupled with Nasdaq delisting risk, indicate a highly precarious situation.

Positives

• Gross profit increased by $2.4 million (8.2%) in fiscal year 2025, driven by a 10% price increase and lower cost of sales.
• Other expense, net, improved by $3.3 million in fiscal year 2025, primarily due to the absence of a non-recurring $3.5 million financial advisory fee incurred in fiscal year 2024.
• Income tax expense was favorable by $0.8 million year-over-year.
• The company successfully raised approximately $2.8 million in net proceeds from convertible debt in June 2024, an additional $300,000 in March 2025, and $3.9 million in net proceeds from an equity offering in February 2025.
• The market for robotic devices for rehabilitation and human performance enhancement is rapidly growing, driven by aging populations and increasing demand for healthcare services.
• DIH's products are adopted by most of the top 50 global leading research centers in human performance and rehabilitation.
• The company has a strong intellectual property portfolio with over 20 trademark families and 411 registrations in 18 countries.
• Zero Occupational Safety and Health Administration (OSHA) recordable or lost time injuries were reported in the U.S. and at other global sites during fiscal years 2025 and 2024.

Negatives

• The company reported a net loss of $8.7 million in fiscal year 2025, an increase of $0.3 million from the prior year.
• Revenue decreased by 2.5% to $62.9 million in fiscal year 2025, primarily due to a change in product mix towards lower average sales price devices.
• Operating expenses, excluding impairment, increased by $4.7 million, driven by higher professional and personnel costs associated with public company operations.
• An impairment of long-lived assets totaling $2.2 million was recorded in fiscal year 2025 due to the discontinuation of the SafeGait product and HocoNet-related software.
• The company had negative cash flows from operating activities of $4.1 million in fiscal year 2025.
• The accumulated deficit reached $43.9 million as of March 31, 2025, indicating a history of operating losses.
• The corporate reorganization, intended to transfer Motek Group and Hocoma AG ownership, has not been completed due to a lien on DIH Hong Kong related to DIH China.
• The company received multiple Nasdaq deficiency notices for failing to meet listing requirements, including market value, public float, and minimum bid price standards, and for delinquent periodic reports, leading to delisting risk.
• Material weaknesses in internal control over financial reporting were identified, including insufficient technical accounting resources, inadequate IT staffing, and controls over management override.
• The company concluded there is substantial doubt about its ability to continue as a going concern for one year from the date of the annual report.

Risks

• The planned corporate reorganization, including the transfer of Motekforce Link BV and Hocoma AG, has not been completed, and there is no assurance it will be, potentially impacting product supply and competitive position.
• Substantial doubt exists about the company's ability to continue as a going concern due to recurring losses, negative operating cash flows, negative working capital, and debt obligations.
• The company is substantially dependent on the commercial success of its current key product lines (LokoMat, Erigo, Armeo, C-Mill, CAREN/Grail), which account for approximately 90% of revenue.
• Approximately 80% of revenue is concentrated in Europe, Middle East, and Africa (EMEA) and Americas, making the company vulnerable to disruptions in these markets.
• Global, regional, and local economic weakness, including inflation, changes in monetary policy, and increased interest rates, could decrease demand and increase expenses.
• War, geopolitical factors (e.g., Israel and Palestine conflict), and foreign exchange fluctuations (e.g., Euro depreciation vs. USD) could adversely affect demand, supply chain, revenue, and profitability.
• The company may not have sufficient funds to meet future operating needs or capital requirements and may need to raise additional capital, potentially diluting shareholders.
• The market for robotics and interactive visual-stimulation smart rehabilitation systems is in an early growth stage, and assumptions about its potential may not be realized.
• Reliance on customer capital budgets, government grants, or charitable donations for product purchases poses a risk if these funds are delayed or reduced.
• Inability to adequately train customers on the safe and appropriate use of products could hinder growth and lead to product liability claims.
• Misuse of products or use of improper techniques by customers could lead to adverse results, patient injury, negative publicity, or lawsuits.
• Loss of key employees or failure to replicate and leverage sales, marketing, and training infrastructure could adversely affect growth.
• The health benefits of the company's products have not yet been substantiated by long-term, large randomized clinical data, which could limit sales.
• Reliance on sole-source third-party manufacturers and suppliers for certain raw materials and products creates supply chain disruption risks.
• Independent distributors may market competing products, potentially impacting sales performance.
• New innovative product and solution offerings may not deliver targeted sales or face slower-than-expected customer acceptance.
• Collaborations, in-licensing arrangements, joint ventures, strategic alliances, or business acquisitions may not result in commercially viable products or significant revenue, and integration risks are high for fragmented industry acquisitions.
• Difficulty managing anticipated growth could strain management and financial resources.
• Extensive and dynamic medical device regulation (FDA, EU MDR, foreign regulations) may impede or hinder product approval or sale, or result in recalls/seizures.
• Adverse medical device reporting obligations, voluntary corrective actions, or agency enforcement actions could harm the business.
• Legislative or regulatory healthcare reforms in the United States and other countries may make it more difficult and costly to obtain regulatory approval, produce, market, and distribute products.
• United States and foreign privacy and data protection laws and regulations (HIPAA, CCPA, CPRA, GDPR) may impose additional liabilities and compliance costs.
• Changes in law or regulation, such as the EU MDR transition, could make it more difficult and costly to manufacture, market, and distribute products.
• Potential disagreement with the FDA regarding product classification (e.g., Class 1) could lead to re-registration requirements and sales suspension in the U.S.
• Comparative claims in advertising and promotion may lead to heightened regulatory scrutiny, enforcement risk, and litigation.
• Failure to obtain or maintain necessary ISO 13485 or (EU) 2017/745 (MDR) certification would harm commercial operations in the EU and other countries.
• Product modifications may require re-registration, new clearances, or renewals, causing delays and resource consumption.
• Innovative product development towards increasingly independent devices (robotics, AI) may bring products under new, complex regulations.
• Negative publicity concerning products could harm business and reputation.
• War in Ukraine and Israel/Palestine could lead to increased market volatility, supply chain disruptions, and cyberattacks.
• Dependence on computer and information systems (Oracle ERP, Microsoft 360) and potential cybersecurity attacks could disrupt business operations or compromise sensitive information.
• Challenges in obtaining and maintaining intellectual property protection (patents, trademarks, trade secrets) globally, especially in developing countries like China.
• Risk of patent infringement claims, particularly for acquired products, leading to substantial costs and potential commercialization restrictions.
• Claims that employees or the company have wrongfully used or disclosed alleged trade secrets of former employers could result in damages and operational restrictions.
• Nasdaq delisting risk due to failure to satisfy listing requirements could reduce trading liquidity and limit access to capital markets.
• Future sales of a substantial number of shares by large stockholders or dilutive exercises of warrants could adversely affect the market price of common stock.
• Dilution to shareholders from future grants of shares under equity incentive plans.
• The company's status as an emerging growth company and smaller reporting company may make its common stock less attractive to investors.
• The price of the company's common stock may be volatile due to various factors, including operating results, competition, regulatory changes, and market conditions.
• Management team has limited experience managing a public company, potentially leading to challenges in navigating regulatory oversight and investor relations.

Future Outlook

Management does not expect a significant increase in revenue in fiscal year 2026 due to current liquidity position and spending constraints. The company plans to pursue additional public or private equity and debt financings, utilize equity-settlement features in existing debenture agreements, and continue initiatives to streamline its organization and cost structure while seeking to improve future revenue growth. The company aims to expand market leadership through sustaining innovation, selective acquisitions (2-3 planned), and developing transformative 'Total Solutions' for rehabilitation care.

Management Comments

• "DIH believes that its future success and financial performance depend on a number of factors that present significant opportunities for its business, but also pose risks and challenges."
• "Management is pursuing additional financing, utilizing permitted equity-settlement features under existing agreements, and implementing cost-reduction and organizational streamlining."
• "We believe that our employees are the Company’s most valued asset and the driving force behind our success."
• "We believe the way out of such an undesirable and increasingly high pressure state is to transform the rehabilitation care model through integrated solutions empowered by our advanced technologies."
• "The Company is committed to having sound corporate governance principles."

Industry Context

The market for robotic devices in rehabilitation and human performance enhancement is experiencing rapid growth, driven by an aging global population, increasing prevalence of chronic diseases, and traumatic injuries. The World Health Organization (WHO) estimates that over 2.4 billion people could benefit from rehabilitation services, with demand for therapists projected to grow by 14% from 2023 to 2033. This growing demand, coupled with a shortage of skilled professionals, creates a need for technology-driven solutions to support and modify traditional manual therapy approaches. DIH aims to capitalize on this trend by providing innovative, robotic-enabled devices and integrated solutions to enhance therapy outcomes and operational efficiency in a fragmented market.

Comparison to Industry Standards

• The company's products, such as CAREN, are considered industry-leading, with CAREN believed to be the 'world's most advanced biomechanics lab,' adopted by most of the top 50 global leading research centers in human performance and rehabilitation.
• DIH's strategy to integrate niche players and build a global growth platform aligns with a consolidation trend in the fragmented rehabilitation therapy and research markets.
• The company's focus on '3i intervention approach' (intensive, interactive, integral) through technology aims to differentiate and deliver high value with better and consistent outcomes, addressing the industry challenge of inconsistent outcomes from manual therapy.
• The company's goal to enable one therapist to treat multiple patients with better outcomes through smart solutions directly addresses the industry-wide shortage of skilled physical therapy professionals, outpacing most other industries in job demand (U.S. Bureau of Labor Statistics).

Management Changes

Corporate Governance

Legal Proceedings

• No material litigation, arbitration, or governmental proceeding is currently pending against the company or its management team.

Related Party Transactions

• The planned corporate reorganization, which includes the transfer of Motek Group and Hocoma AG ownership to DIH Holding US, Inc., has not been completed due to a lien on DIH Hong Kong related to DIH China.
• DIH Cayman remains the largest shareholder of the Company and continues to own 100% interest in DIH International (DIH Hong Kong).
• The company has three related party notes payable to Hocoma AG totaling $8.6 million as of March 31, 2025, due June 30, 2026, with a 1.25% annual interest rate, stemming from asset transfers in July 2021.
• The company has an exclusive distribution agreement with Motek Group, from which it made purchases of $9.5 million in fiscal year 2025 and $13.6 million in fiscal year 2024.
• As of March 31, 2025, 'Due from related party' (Motek Group) was $3.2 million and 'Due to related party' (Motek Group) was $7.9 million.
• During fiscal 2025, the company wrote off $1.1 million of related-party receivables as uncollectible and settled approximately $1.5 million of related-party receivables and payables with DIH Hong Kong, resulting in $0 balances at March 31, 2025.
• The company issued 12,676 shares of Common Stock valued at $0.5 million to members of its Board of Directors as compensation during fiscal year 2025.

Stakeholder Impact

• **Shareholders**: Face significant dilution risk from ongoing and future capital raises, including convertible debt and equity offerings. The 1-for-25 reverse stock split aims to address Nasdaq listing compliance but does not change underlying value. Nasdaq delisting risk could reduce trading liquidity and limit access to capital markets, negatively impacting share price.
• **Employees**: The company is highly dependent on its global leadership team and skilled employees; loss of key personnel or failure to develop talent could adversely affect growth. The company emphasizes fostering a positive work environment and diversity, equity, and inclusion.
• **Customers**: May experience delays or disruptions in product availability due to supply chain issues and the incomplete corporate reorganization. The company's focus on 'Total Solutions' and intensive training aims to enhance customer value and patient outcomes.
• **Suppliers**: The company's reliance on sole-source third-party manufacturers and suppliers creates risk for both parties if disruptions occur. The company's liquidity constraints could impact timely payments to vendors.
• **Creditors**: Holders of convertible debentures are senior secured by substantially all domestic assets, providing some protection, but the 'going concern' doubt highlights repayment risks. Anti-dilution provisions protect debenture and warrant holders from certain dilutive events.

Next Steps

• Complete the corporate reorganization to transfer ownership of Motek Group and Hocoma AG.
• Address Nasdaq deficiency notices and regain compliance with listing requirements to avoid delisting.
• Secure additional public or private equity and debt financings to alleviate liquidity constraints and support operations.
• Utilize permitted equity-settlement features in existing debenture agreements for certain redemptions and interest payments.
• Continue initiatives to streamline the organization and cost structure while seeking to improve future revenue growth.
• Implement improvements in technical accounting resources, processes, documentation, and staff training to remediate material weaknesses in internal control over financial reporting.
• Appoint one additional independent director to fulfill conditions for the remaining $0.5 million funding tranche from the August 7, 2025 debenture issuance.
• Seek stockholder approval for additional share issuances related to debentures and warrants under Nasdaq rules.
• Seek stockholder approval for amending certain June 6, 2024 and March 20, 2025 debentures to align their minimum base conversion price with the new debentures.

Key Dates

Recommendation

The filing presents a highly concerning financial picture for DIH Holding US, Inc. The explicit statement of 'substantial doubt about its ability to continue as a going concern' is a critical red flag for any investor. This doubt is underpinned by recurring net losses ($8.7 million in FY2025), negative cash flow from operations ($4.1 million in FY2025), and a significant accumulated deficit ($43.9 million). While the company has raised capital, the need for continuous financing, coupled with the ongoing Nasdaq delisting risk, indicates severe liquidity challenges and a precarious financial position. The incomplete corporate reorganization and identified material weaknesses in internal controls further compound operational and governance risks. Despite operating in a growing market, the company's current financial instability and operational hurdles outweigh any potential long-term growth prospects, making it a high-risk investment with significant downside potential.

Keywords

Robotic Rehabilitation, Medical Devices, Physical Therapy, Rehabilitation Technology, SEC Filing, 10-K, Nasdaq, Healthcare, Robotics, Hocoma, Motek, Lokomat, Armeo, Andago, C-Mill, CAREN, Going Concern, Capital Raise, Reverse Stock Split, Corporate Governance, Financial Performance, Risk Management, Cybersecurity, Intellectual Property, Supply Chain, Regulatory Compliance, Medical Device Regulation, EMEA, Americas, Asia Pacific