DarioHealth Reports Third Quarter 2021 Results and Operational Highlights

Rhea-AI Summary

DarioHealth Corp. (Nasdaq: DRIO) announced its Q3 2021 financial results, showcasing a remarkable 176% revenue growth year-over-year, reaching $5.6 million. Pro-forma gross margin improved to 45% from 26.9% a year prior. Despite robust revenue growth, the company reported an operating loss of $22.5 million, up 240.8% from Q3 2020. Dario secured 47 contracts to date, with a billion-dollar pipeline, primarily focused on multi-condition digital health solutions. The firm is well-funded with $51.3 million in cash, supporting its growth strategy in the competitive digital therapeutics market.

Positive

• Total revenue increased by 176% year-over-year, amounting to $5.6 million for Q3 2021.
• Pro-forma gross margin improved to 45%, a significant rise from 26.9% in Q3 2020.
• Established 47 contracts and a pipeline valued at $1 billion, with 80% related to multi-condition opportunities.
• Successfully integrated technology from Upright Technologies, enhancing the B2B product offering.

Negative

• Operating loss increased to $22.5 million, up 240.8% compared to Q3 2020.
• Net loss for Q3 2021 was $22.4 million, a 243% increase from the prior year.
• Total operating expenses rose by 155% to $58.2 million for the nine months ended September 30, 2021.

NEW YORK, Nov. 15, 2021 /PRNewswire/ -- DarioHealth Corp. (Nasdaq: DRIO), a pioneer in the global digital therapeutics market, today reported financial results for the third quarter of 2021 and provided a corporate and commercial update.

"The third quarter provided the strongest validation yet of our strategy of building one of the broadest multi-chronic condition digital health platforms in the industry," stated Erez Raphael, Chief Executive Officer of Dario. "We signed several multi-condition contracts in the last quarter, reflecting the demand for a single platform that can engage members across many high-cost conditions in an integrated user experience.  Of particular note, we were able to quickly and efficiently integrate the technology we obtained through our acquisition of Upright Technologies in January into our business-to-business (B2B) product offering which has contributed to the accelerating sales momentum reflected in both our third quarter and recent contract announcements."

"We again delivered robust financial performance, with total revenue growth of 176% over the comparable period in 2020 and pro-forma gross margin of 45%, up substantially from 26.9% a year ago. We anticipate gross margins will continue to expand over the long-term as we scale our Software as a Service (SaaS) model. Finally, our balance sheet remains very strong, with $51.3 million of cash as of September 30, 2021. We believe that we are well funded to execute on our multi-faceted growth plan," Mr. Raphael concluded.

"We made significant progress advancing our B2B strategy across all three channels - payers, employers and providers - during the third quarter.  We signed a national health plan and several employers and providers and ended the quarter with 47 contracts and several more in contracting.  The rapid acceleration of new accounts in the third quarter is a result of the work we have done over the last 18 months to increase the visibility of Dario and build the pipeline, which is now coming to fruition. We believe that our development of an integrated multi-condition platform has been a key contributing factor in our competitive wins in the B2B space," stated Rick Anderson, President and General Manager of Dario North America. "We continue to see robust growth of the pipeline, which now stands at $1 billion, with multi-condition opportunities representing 80% of that pipeline."        

Q3 2021 and Recent Highlights

Accelerating Market Access  

• Significantly increased pipeline conversion with nine new contracts in the third quarter, for a total of 47 signed accounts; 80% of which signed in the last 5 months. 
• Grew the pipeline to $1 billion, with multi-condition opportunities representing approximately 80% of the pipeline.
• Announced key strategic partnerships representing significant opportunities to scale across the employer market: Virgin Pulse, the leading global provider of digital and live health and wellbeing solutions; and a leading national benefits administrative platform. Both contracts broaden distribution operational enablement of Dario's full suite of integrated digital therapeutic solutions to a wide range of employers beginning in January of 2022.
• Hired seasoned sales executive Jerrod Helms for the newly created position of Chief Commercial Officer to support Dario's rapid expansion across employers, providers, and payers.

Expanding Client Base 

• Further validated Dario's strategy of building a multi-chronic integrated platform of digital therapeutic solutions by announcing the first set of multi-condition customer wins, including our first contract for the full suite of solutions - diabetes, pre-diabetes, hypertension, musculoskeletal, behavioral health, and digital employee assistance programs – with a large national employer.
• Contracted with a leading national health plan serving millions of members for Dario's behavioral health solution. Dario will be paid a monthly fee for each member that has access to the platform.
• Further expanded our provider business through new Remote Patient Monitoring (RPM) contracts with two prominent regional providers in Hawaii and Georgia. The two new contracts expand Dario's provider footprint with one of the largest providers in Hawaii, and a metro Atlanta primary care system with multiple locations. Both partnerships will provide RPM services for patients living with diabetes and hypertension.    

Other

• Unveiled its integrated musculoskeletal (MSK) solution "Dario Move" at HLTH 2021, one of the largest and most important conferences on health innovation. Dario Move represents full integration of MSK into our multi-condition platform just nine months following the acquisition of Upright Technologies and the achievement of a significant company milestone.

Third Quarter 2021 Results Summary

Revenues for the three months ended September 30, 2021, were $5.6 million, a 7% sequential increase from the three months ended June 30, 2021, and a 176% increase from the $2.0 million for the three months ended September 30, 2020.

Gross profit for the three months ended September 30, 2021, was $826,000, an increase of $277,000, or 50.5%, compared to gross profit of $549,000 for the three months ended September 30, 2020. Gross profit margin was 14.7% for the three months ended September 30, 2021, as compared to 26.9% for the three months ended September 30, 2020.

Pro-forma gross profit, excluding $1,706,000 of amortization of expenses related to the acquisition of Upright Technologies and wayForward, was $2.5 million or 45.0% of revenues for the three months ended September 30, 2021.

Operating loss for the three months ended September 30, 2021 was $22.5 million, an increase of $15.9 million, or 240.8%, compared to the $6.6 million operating loss for the three months ended September 30, 2020. This increase was mainly due to the increase in our operating expenses and stock-based compensation.

Net loss was $22.4 million for the three months ended September 30, 2021, an increase of $15.9 million, or 243%, compared to the $6.55 million net loss for the three months ended September 30, 2020.

Non-Generally Accepted Accounting Principles (Non-GAAP) adjusted net loss for the three months ended September 30, 2021, was $11.9 million, an increase of $7.2 million, or 151%, compared to the $4.7 million non-GAAP adjusted net loss for the three months ended September 30, 2020. This increase was mainly due to the increase in our operating expenses.

Cash and cash equivalents totaled $51.3 million on September 30, 2021.

Non-GAAP billings for the three months ended September 30, 2021, were $5.53 million, a 169% increase from $2.05 million reported in the three months ended September 30, 2020. The increase is a result of higher sales generated in the three months ended September 30, 2021, compared to the three months ended September 30, 2020. A reconciliation of GAAP to non-GAAP measures has been provided in the financial statement tables included in this press release. An explanation of these measures is also included below under the heading "Non-GAAP Financial Measures."

Financial Results for the Nine Months Ended September 30, 2021:

Revenue for the nine months ended September 30, 2021, was $14.5 million, a 164% increase from $5.5 million for the nine months ended September 30, 2020.

Gross profit of $3.4 million was recorded for the nine months ended September 30, 2021, an increase of 74%, or $1.45 million, compared to gross profit of $2.0 million for the nine months ended September 30, 2020.

Pro-forma gross profit, excluding $3.3 million of amortization of expenses related to the acquisition of Upright Technologies and WayForward, was $6.7 million or 46.5% of revenues, in the nine months ended September 30, 2021.

Total operating expenses for the nine months ended September 30, 2021, were $58.2 million, an increase of $35.4 million, or 155%, compared with $22.8 million for the nine months ended September 30, 2020. The increase resulted from an increase in our research and development activities, sales and marketing expenses and stock-based compensation.

Operating loss for the nine months ended September 30, 2021, increased by $34 million to $54.8 million, compared to a $20.8 million operating loss for the nine months ended September 30, 2020. This increase is mainly due to the increase in our operating expenses.

Net loss was $55.2 million for the nine months ended September 30, 2021, compared to a net loss of $20.4 million for the nine months ended September 30, 2020. The reason for the increase in net loss was mainly due to an increase in operating expenses.

Non-GAAP adjusted net loss for the nine months ended September 30, 2021, was $31.7 million, a 171% increase from a $11.7 million non-GAAP adjusted net loss for the nine months ended September 30, 2020. This increase was mainly due to the increase in our operating expenses.

Non-GAAP billings for the nine months ended September 30, 2021, were $14.3 million, a 158% increase from $5.6 million in the nine months ended September 30, 2020.

A reconciliation of GAAP to non-GAAP measures has been provided in the financial statement tables included in this press release. An explanation of these measures is also included below under the heading "Non-GAAP Financial Measures."

Conference Call Details: Tuesday, November 16, 8:30am ET

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Conference ID: 13724897 
Webcast: https://viavid.webcasts.com/starthere.jsp?ei=1511170&tp_key=13b2851117

Participants are asked to dial-in approximately 10 minutes prior to the start of the event. A replay of the call will be available approximately two hours after completion through December 16, 2021. To listen to the replay, dial 844-512-2921 (domestic) or 412-317-6671 (international) and use replay passcode 13724897. The webcast replay will be available for two months.

About DarioHealth Corp.

DarioHealth Corp. (Nasdaq: DRIO) is a leading global digital therapeutics company revolutionizing how people with chronic conditions manage their health. DarioHealth offers one of the most comprehensive digital therapeutics solutions on the market - covering multiple chronic conditions including diabetes, hypertension, weight management, musculoskeletal and behavioral health within one integrated technology platform.

Dario's next-generation, AI-powered, digital therapeutic platform supports more than just an individual's disease. Dario provides adaptive, personalized experiences that drive behavior change through evidence-based interventions, intuitive, clinically proven digital tools, high-quality software, and coaching to help individuals improve health and sustain meaningful outcomes.

Dario's unique user-centric approach to product design and engagement creates an unparalleled experience that is highly rated by users and delivers sustainable results.

The company's cross-functional team operates at the intersection of life sciences, behavioral science, and software technology and utilizes a performance-based approach to improve its users' health.

On the path to better health, Dario makes the right thing to do the easy thing to do. To learn more about DarioHealth and its digital health solutions, or for more information, visit http://dariohealth.com.

Cautionary Note Regarding Forward-Looking Statements

This news release and the statements of representatives and partners of DarioHealth Corp. related thereto contain or may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Statements that are not statements of historical fact may be deemed to be forward-looking statements. For example, the Company is using forward-looking statements in this press release when it discusses that its results provide validation of its strategy of building one of the broadest multi-chronic condition digital health platforms in the industry, that it anticipates gross margins will continue to expand over the long-term as it scales its SaaS model, its belief that it is well funded to execute on its multi-faceted growth plan and the belief that its development of an integrated multi-condition platform has been a key contributing factor in its competitive wins in the B2B space. Without limiting the generality of the foregoing, words such as "plan," "project," "potential," "seek," "may," "will," "expect," "believe," "anticipate," "intend," "could," "estimate" or "continue" are intended to identify forward-looking statements. Readers are cautioned that certain important factors may affect the Company's actual results and could cause such results to differ materially from any forward-looking statements that may be made in this news release. Factors that may affect the Company's results include, but are not limited to, regulatory approvals, product demand, market acceptance, impact of competitive products and prices, product development, commercialization or technological difficulties, the success or failure of negotiations and trade, legal, social and economic risks, and the risks associated with the adequacy of existing cash resources. Additional factors that could cause or contribute to differences between the Company's actual results and forward-looking statements include, but are not limited to, those risks discussed in the Company's filings with the U.S. Securities and Exchange Commission. Readers are cautioned that actual results (including, without limitation, the timing for and results of the Company's commercial and regulatory plans for Dario™ as described herein) may differ significantly from those set forth in the forward-looking statements. The Company undertakes no obligation to publicly update any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by applicable law.

Non-GAAP Financial Measures

We have provided in this release financial information that has not been prepared in accordance with Generally Accepted Accounting Principles (GAAP). These non-GAAP financial measures are not based on any standardized methodology prescribed by GAAP and are not necessarily comparable to similar measures presented by other companies. We use these non-GAAP financial measures internally in analyzing our financial results and believe they are useful to investors, as a supplement to GAAP measures, in evaluating our ongoing operational performance. We believe that the use of these non-GAAP financial measures provides an additional tool for investors to use in evaluating ongoing operating results and trends and in comparing our financial results with peer companies, many of which present similar non-GAAP financial measures to investors.

Non-GAAP financial measures should not be considered in isolation from, or as a substitute for, financial information prepared in accordance with GAAP. Investors are encouraged to review the reconciliation of these non-GAAP financial measures to their most directly comparable GAAP financial measures provided in the financial statement tables below.

Billings (non-GAAP). We define billings as revenue recognized in accordance with GAAP plus the change in deferred revenue from the beginning to the end of the period and adjustment to the deferred revenue balance due to adoption of the new revenue recognition standard less any deferred revenue balances acquired from business combination(s) during the period. We consider billings to be a useful metric for management and investors because billings drive future revenue, which is an important indicator of the health and viability of our business. There are a number of limitations related to the use of billings instead of GAAP revenue. First, billings include amounts that have not yet been recognized as revenue and are impacted by the term of security and support agreements. Second, we may calculate billings in a manner that is different from peer companies that report similar financial measures. Management accounts for these limitations by providing specific information regarding GAAP revenue and evaluating billings together with GAAP revenue.

Operating expenses (non-GAAP). Our presentation of non-GAAP operating expenses excludes stock-based compensation expenses. Due to varying available valuation methodologies, subjective assumptions, and the variety of equity instruments that can impact a company's non-cash operating expenses, we believe that providing non-GAAP financial measures that exclude non-cash expense provides us with an important tool for financial and operational decision making and for evaluating our own core business operating results over different periods of time.

Net loss (non-GAAP). Our presentation of adjusted net loss excludes the effect of certain items that are non-GAAP financial measures. Adjusted net loss represents net loss determined under GAAP without regard to stock-based compensation expenses, deferred inventory and depreciation of fixed assets. We believe these measures provide useful information to management and investors for analysis of our operating results.

 

DARIOHEALTH CORP.
CONSOLIDATED BALANCE SHEETS
U.S. dollars in thousands
		September 30,			December 31,
		2021			2020
		Unaudited
ASSETS
CURRENT ASSETS:
Cash and cash equivalents		$	51,331		$	28,590
Short-term restricted bank deposits			251			187
Trade receivables			2,106			124
Inventories			4,058			2,293
Other accounts receivable and prepaid expenses			1,481			2,934
Total current assets			59,227			34,128
NON-CURRENT ASSETS:
Deposits			20			20
Operation lease right of use assets			361			498
Long-term assets			57			185
Property and equipment, net			713			576
Intangible assets, net			17,409			-
Goodwill			39,399			-
Total non-current assets			57,959			1,279
Total assets		$	117,186		$	35,407

 

 

DARIOHEALTH CORP.
CONSOLIDATED BALANCE SHEETS
U.S. dollars in thousands (except stock and stock data)
		September 30,			December 31,
		2021			2020
		Unaudited
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Trade payables		$	3,990		$	2,480
Deferred revenues			1,213			1,224
Operating lease liabilities			293			310
Other accounts payable and accrued expenses			7,185			3,020
Total current liabilities			12,681			7,034
OPERATING LEASE LIABILITIES			66			222
STOCKHOLDERS' EQUITY
Common Stock of $0.0001 par value - Authorized: 160,000,000 shares at September 30, 2021 (unaudited) and December 31, 2020;  Issued and Outstanding: 16,509,344 and 8,119,493 shares at September 30, 2021 (unaudited) and December 31, 2020, respectively			*) -			*) -
Preferred Stock of $0.0001 par value - Authorized: 5,000,000 shares at September 30, 2021 (unaudited) and December 31, 2020; Issued and Outstanding: 12,097 and 15,823 shares at September 30, 2021 (unaudited)  and December 31, 2020, respectively			*) -			*) -
Additional paid-in capital			304,382			171,399
Accumulated deficit			(199,943)			(143,248)
Total stockholders' equity			104,439			28,151
Total liabilities and stockholders' equity		$	117,186		$	35,407

 

 

DARIOHEALTH CORP.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS
U.S. dollars in thousands (except stock and stock data)
		Three months ended						Nine months ended
		September 30,						September 30,
		2021			2020			2021			2020
		Unaudited						Unaudited
Revenues		$	5,629		$	2,042		$	14,485		$	5,496
Cost of revenues			3,097			1,493			7,746			3,532
Amortization of acquired intangible assets and inventories step-up			1,706			-			3,324			-
Gross profit			826			549			3,415			1,964
Operating expenses:
Research and development		$	5,506		$	954		$	11,903		$	3,010
Sales and marketing			10,696			3,635			27,476			10,334
General and administrative			7,123			2,562			18,865			9,459
Total operating expenses			23,325			7,151			58,244			22,803
Operating loss			(22,499)			(6,602)			(54,829)			(20,839)
Total financial (income) expenses, net			(55)			(52)			346			(391)
Net loss		$	(22,444)		$	(6,550)		$	(55,175)		$	(20,448)
Deemed dividend		$	488		$	930		$	1,520		$	2,991
Net loss attributable to holders of Common Stock		$	(22,932)		$	(7,480)		$	(56,695)		$	(23,439)
Net loss per share:
Basic and diluted net loss per share		$	(1.18)		$	(0.71)		$	(2.98)		$	(2.95)
Weighted average number of Common Stock used in computing basic and diluted net loss per share			16,473,449			7,328,420			16,202,541			4,856,115

 

 

DARIOHEALTH CORP.
CONSOLIDATED STATEMENTS OF CASH FLOWS
U.S. dollars in thousands
		Nine months ended
		September 30,
		2021			2020
		Unaudited
Cash flows from operating activities:
Net loss		$	(55,175)		$	(20,448)
Adjustments required to reconcile net loss to net cash used in operating activities:
Stock-based compensation, common stock, and stock instead of cash compensation to directors, employees, consultants, and service providers			18,670			8,988
Depreciation			202			140
Change in operating lease right of use assets			137			224
Amortization of acquired inventories step-up			985			-
Amortization of acquired intangible assets			2,396			-
Decrease (increase) in trade receivables			(1,125)			129
Decrease (increase) in other accounts receivable, prepaid expense and long-term assets			221			(338)
Decrease (increase) in inventories			96			(158)
Increase in trade payables			-			343
Increase (decrease) in other accounts payable and accrued expenses			(1,368)			311
Increase (decrease) in deferred revenues			(139)			62
Change in operating lease liabilities			(173)			(229)
Net cash used in operating activities			(35,273)			(10,976)
Cash flows from investing activities:
Investment in deposit			(2)			(4)
Purchase of property and equipment			(193)			(69)
Cash paid as part of PsyInnovations Inc. (dba WayForward) acquisition			(5,023)			-
Loans repaid as part of Upright Technologies Ltd. acquisition			(3,016)			-
Cash acquired as part of Upright Technologies Ltd. acquisition			544			-
Net cash used in investing activities			(7,690)			(73)
Cash flows from financing activities:
Proceeds from issuance of common stock, net of issuance costs			64,877			27,548
Proceeds from exercise of warrants			633			-
Proceeds from exercise of options			256			-
Net cash provided by financing activities			65,766			27,548
Increase in cash, cash equivalents and short-term restricted bank deposits			22,803			16,499
Cash, cash equivalents and short-term restricted bank deposits at beginning of period			28,725			20,535
Cash, cash equivalents and short-term restricted bank deposits at end of period		$	51,528		$	37,034

 

 

Reconciliation of Revenue to Billing (Non-GAAP)
U.S. dollars in thousands
		Three Months Ended September 30,				Nine Months Ended September 30,
		2021		2020		2021		2020
GAAP Revenue		5,629		2,042		14,485		5,496
Add:
Change in deferred revenue		(96)		15		(139)		62
Billing (Non-GAAP)		5,533		2,057		14,346		5,558

 

 

Reconciliation of Operating Loss, Net Loss and Operating Expenses to Adjusted
Operating Loss, Net Loss and Operating Expenses (Non-GAAP)
U.S. dollars in thousands
Three months ended September 30, 2021
	GAAP		Stock-based compensation Expenses		Acquisition costs, amortization of acquisition related expenses and depreciation of fixed assets		Non-GAAP
Cost of Revenues	$	4,803		(26)		(1,735)		3,042
Gross Profit		826		26		1,735		2,587
Research and development		5,506		(1,415)		(20)		4,071
Sales and Marketing		10,696		(1,804)		(56)		8,836
General and Administrative		7,123		(5,525)		(10)		1,588
Total Operating Expenses		23,325		(8,744)		(86)		14,495
Operating Loss	$	(22,499)		8,770		1,821		(11,908)
Financing income		(55)		-		-		(55)
Net Loss	$	(22,444)		8,770		1,821		(11,853)
Three months ended September 30, 2020
	GAAP		Stock-based compensation Expenses		Depreciation of fixed assets		Non-GAAP
Cost of Revenues	$	1,493		(4)		(29)		1,460
Gross Profit		549		4		29		582
Research and development		954		(145)		(6)		803
Sales and Marketing		3,635		(518)		(9)		3,108
General and Administrative		2,562		(1,143)		(4)		1,415
Total Operating Expenses		7,151		(1,806)		(19)		5,326
Operating Loss	$	(6,602)		1,810		48		(4,744)
Financing income		(52)		-		-		(52)
Net Loss	$	(6,550)		1,810		48		(4,692)
Nine months ended September 30, 2021
	GAAP		Stock-based compensation Expenses		Acquisition costs, amortization of acquisition related expenses and depreciation of fixed assets		Non-GAAP
Cost of Revenues	$	11,070		(63)		(3,415)		7,592
Gross Profit		3,415		63		3,415		6,893
Research and development		11,903		(2,479)		(52)		9,372
Sales and Marketing		27,476		(4,008)		(90)		23,378
General and Administrative		18,865		(12,120)		(906)		5,839
Total Operating Expenses		58,244		(18,607)		(1,048)		38,589
Operating Loss	$	(54,829)		18,670		4,463		(31,696)
Financing income		346		-		-		346
Net Loss	$	(55,175)		18,670		4,463		(32,042)
Nine months ended September 30, 2020
	GAAP		Stock-based compensation Expenses		Depreciation of fixed assets		Non-GAAP
Cost of Revenues	$	3,532		(24)		(87)		3,421
Gross Profit		1,964		24		87		2,075
Research and development		3,010		(591)		(18)		2,401
Sales and Marketing		10,334		(2,267)		(25)		8,042
General and Administrative		9,459		(6,106)		(10)		3,343
Total Operating Expenses		22,803		(8,964)		(53)		13,786
Operating Loss	$	(20,839)		8,988		140		(11,711)
Financing income		(391)		-		-		(391)
Net Loss	$	(20,448)		8,988		140		(11,320)

 

 

 

DarioHealth Corporate Contact: 
Claudia Levi 
Content & Communications Manager
claudia@mydario.com 
+1-347-767-4220

Media Inquiries:
Investor Relations Contact:
Chuck Padala
chuck@lifesciadvisors.com
+1-646-627-8390

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SOURCE DarioHealth Corp.

FAQ

What were DarioHealth's revenue results for Q3 2021?

DarioHealth reported revenue of $5.6 million for Q3 2021, a 176% increase compared to the same quarter in 2020.

How did DarioHealth's gross margin change in Q3 2021?

Pro-forma gross margin for DarioHealth improved to 45% in Q3 2021, up from 26.9% a year earlier.

What is DarioHealth's current contract status?

DarioHealth has signed 47 contracts to date, with a significantly growing pipeline valued at $1 billion.

What was the net loss reported by DarioHealth for Q3 2021?

DarioHealth reported a net loss of $22.4 million for Q3 2021, a 243% increase from Q3 2020.

How much cash did DarioHealth have as of September 30, 2021?

As of September 30, 2021, DarioHealth's cash and cash equivalents totaled $51.3 million.