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DarioHealth Reports Third Quarter 2020 Results

NEW YORK, Nov. 12, 2020 /PRNewswire/ -- DarioHealth Corp. (Nasdaq: DRIO), a pioneer in the global digital therapeutics market, today reported financial results for the third quarter 2020 and provided a corporate and commercial update.

 

DarioHealth logo

 

"During the third quarter we achieved 14.2% sequential growth in our revenues, but more importantly, we made significant strides in penetrating the multiple verticals within the Business-to-Business-to-Consumer (B2B2C) channel with our digital therapeutics solutions," stated Erez Raphael, Chief Executive Officer of Dario. "Most notably, our recently announced partnership agreements with Vitality Group and HMC Healthworks provide access of our solutions to end users through their employers or benefits providers. We believe that our industry consumer engagement metrics and open architecture that allows for seamless integration with legacy systems are key differentiating factors relative to our competition that have resonated with customers and prospects alike.

"The execution of our multi-year, strategic plan has led to advanced late-stage contracting discussions with health plans, self-insured employers and providers. We are encouraged by the fact that we are pursuing multiple large opportunities, and we anticipate many of these agreements will close and launch in the near term. Furthermore, as our sales pipeline has grown during the third quarter, we believe that our ongoing investments in our U.S. commercial infrastructure have positioned Dario for a transformational year in 2021."

"We ended the third quarter with $37 million in cash on the balance sheet after completing a successful $28.6 million financing in July," Zvi Ben-David, Dario's Chief Financial Officer added. "This is the largest cash position in the Company's history. Our liquidity is sufficient to invest in research and development, expand our portfolio of chronic diseases and build the necessary sales and marketing infrastructure to drive further penetration of the B2B2C channel. We believe that we are funded to achieve our goals in the coming quarters." 

Q3 2020 Operations Update and Recent Highlights

Opening B2B2C Channels: Commercial Development & Strategic Collaborations

  • In October 2020, we announced inclusion in Vitality's new Gateway Flex offering, allowing Dario's digital therapeutics platform to be marketed to Vitality's vast employer base that provides benefits solutions to 20 million people.
  • In September 2020, we announced a partnership agreement with HMC Healthworks that extends DarioHealth's reach into HMC's vast multi-employer client base through which HMC is currently managing more than one million members.
  • In July 2020, we entered the U.K. RPM market through an agreement with Williams Medical, making Dario's RPM platform available to healthcare professionals throughout the U.K. and Ireland.

Clinical Evidence Development

  • In August 2020, we presented a poster at the Virtual Association of Diabetes Care and Education Specialists 2020 Annual Conference. The poster, entitled, "Impact of Digital Management on Clinical Outcome in Patients with Chronic Conditions: Diabetes and Hypertension," details results from an observational study of 345 participants with hypertensive blood pressure at baseline who utilized the Dario digital therapeutics platform. The study found that Dario's digital therapeutics platform helped drive improved blood pressure at three months and glycemic control at six months compared to baseline.

Corporate Developments

  • In September 2020, we appointed Eric Milledge as Chairman of Dario's newly created Scientific Advisory Board (SAB). The SAB will work alongside the company's research and development team and external partners to develop and implement the Dario's strategic roadmap for its technology platform.
  • In July 2020, we appointed Dennis Matheis, President of Optima Health, a health plan with more than 850,000 members, to our Board of Directors, further supporting Dario's ongoing transition to B2B2C.
  • In July 2020, we announced that we successfully raised gross proceeds of $28.6 million through a private placement of common shares and pre-funded warrants.

Third Quarter 2020 Results Summary

Financial Results for the Three Months Ended September 30, 2020:

Revenues for the third quarter ended September 30, 2020 were $2.04 million, a 14.2% sequential increase from second quarter ended June 30, 2020, and a 9.3% increase from $1.87 million in revenues in the third quarter ended September 30, 2019.

Revenues generated during the third quarter ended September 30, 2020 were derived mainly from the sales of our products and from the offering of our membership plans to our customers in the U.S.

At the end of the third quarter ended September 30, 2020, we accumulated deferred income of $1.28 million that we expect to recognize during the next four fiscal quarters.

Gross profit in the third quarter ended September 30, 2020 was $549,000, a decrease of $324,000, or 37%, compared to gross profit of $873,000 in the third quarter ended September 30, 2019. This decrease is mainly a result of a decrease in the average selling prices of our products in the third quarter ended September 30, 2020.

Total operating expenses for the third quarter ended September 30, 2020 were $7.15 million, an increase of $3.48 million, or 94.7%, compared with $3.7 million for the third quarter ended September 30, 2019. The increase in operating expenses was mainly due to the increase in marketing expenses and an increase in equity-based compensation to directors, employees and service providers.

Operating loss for the third quarter ended September 30, 2020 was $6.6 million, an increase of $3.8 million, or 136%, compared to a $2.8 million operating loss in the third quarter ended September 30, 2019. This increase was mainly due to the decrease in our gross profit and an increase in our operating expenses.

Net loss was $6.55 million, or $0.71 per common share, in the third quarter ended September 30, 2020, compared to a net loss of $2.8 million, or $1.11 per common share, in the third quarter ended September 30, 2019.

The company had cash and cash equivalents totaling $37 million at September 30, 2020.

Non-GAAP billings for the three months ended September 30, 2020 were $2.06 million, a 15.5% increase from $1.78 million reported in the three months ended September 30, 2019.

Non-GAAP adjusted net loss for the three months ended September 30, 2020 was $4.74 million, a 122% increase from a $2.14 million non-GAAP adjusted net loss for the three months ended September 30, 2019.

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, 2020:

Revenue for the nine months ended September 30, 2020 was $5.5 million, a 4.6% decrease from $5.76 million for the nine months ended September 30, 2019. This decrease is mainly a result of a decrease in our direct to consumer revenues in the first six months of 2020 compared to the first six months of 2019. During the nine months ended September 30, 2020, we recorded an additional $62,000 as deferred revenues from revenues generated from our membership offering to our customers in the U.S.

Gross profit of $1.96 million was recorded for the nine months ended September 30, 2020, an increase of 11.8%, or $207,000, compared to gross profit of $1.76 million for the nine months ended September 30, 2019. This increase is mainly a result of an increase in revenues generated from our membership offering and a corresponding decrease in product sales.

Total operating expenses for the nine months ended September 30, 2020 were $22.8 million, an increase of $7.5 million, or 49.2%, compared with $15.3 million for the nine months ended September 30, 2019. The increase in operating expenses was mainly due to the increase in marketing expenses and an increase in equity-based compensation to directors, employees and service providers.

Operating loss for the nine months ended September 30, 2020 increased by $7.3 million to $20.8 million, compared to a $13.5 million operating loss for the nine months ended September 30, 2019. This increase is mainly a result from an increase in our equity-based compensation.

Net loss was $20.45 million for the nine months ended September 30, 2020 compared to a net loss of $13.56 million for the nine months ended September 30, 2019. The reason for the was mainly due to an increase in operating expenses.

Non-GAAP billings for the nine months ended September 30, 2020 were $5.56 million, a 12.3% decrease from $6.34 million in the nine months ended September 30, 2019.

Non-GAAP adjusted net loss for the nine months ended September 30, 2020 was $11.7 million, a 2.2% increase from a $11.5 million non-GAAP adjusted net loss for the nine months ended September 30, 2019.

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: Thursday, November 12, 9:00am EDT

Dial-in Number: 844-369-8770

International Dial-in: 862-298-0840

Conference ID:  DarioHealth Third Quarter 2020 Earnings Call and Webcast

Webcast: https://www.webcaster4.com/Webcast/Page/2224/38235

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 November 26, 2020. To listen to the replay, dial 877-481-4010 (domestic) or 919-882-2331 (international) and use replay passcode 38235. The webcast replay will be available through February 12, 2021.

About DarioHealth Corp.

DarioHealth Corp. (Nasdaq: DRIO) is a leading, global digital therapeutics company revolutionizing the way people with chronic conditions manage their health. By delivering evidence-based interventions that are driven by data, high-quality software and coaching, we empower individuals to make healthy adjustments to their daily lifestyle choices to improve their overall health. Our cross-functional team operates at the intersection of life sciences, behavioral science and software technology to deliver highly engaging therapeutic interventions. Dario is one of the highest-rated diabetes solutions in the market, and its user-centric MyDario™ mobile app is loved by tens of thousands of consumers around the globe. DarioHealth is rapidly moving into new chronic conditions and geographic markets, using a performance-based approach to improve the health of users managing chronic disease. To learn more about DarioHealth and its digital health solutions. For more information, visit https://www.dariohealth.com/.

Cautionary Note Regarding Forward-Looking Statements

This news release and the statements of representatives and partners of DarioHealth Corp. (the "Company") 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. 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. For example, the Company is using forward-looking statements in this press release when it discusses its belief that its consumer engagement metrics and open architecture are key differentiating factors relative to its competition that have resonated with customers and prospects alike, the growth of its sales pipeline, the belief that its ongoing investments in its U.S. commercial infrastructure have positioned Dario for a transformational year in 2021, that its liquidity is sufficient to invest in research and development, expand its portfolio of chronic diseases and build the necessary sales and marketing infrastructure to drive further penetration of the B2B2C channel and the belief that it is funded to achieve its goals in the coming quarters. 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 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,




2020


2019




Unaudited




ASSETS
















CURRENT ASSETS:








Cash and cash equivalents


$

36,907


$

20,395


Short-term restricted bank deposits



179



191


Trade receivables



543



672


Inventories



1,572



1,414


Other accounts receivable and prepaid expenses



629



267










Total current assets



39,830



22,939










NON-CURRENT ASSETS:








Deposits



20



17


Operating lease right of use assets



541



765


Long-term assets



176



200


Property and equipment, net



577



648










Total non-current assets



1,314



1,630










Total assets


$

41,144


$

24,569


 

 

DARIOHEALTH CORP.


CONSOLIDATED BALANCE SHEETS


U.S. dollars in thousands (except stock and stock data)






September 30,


December 31,




2020


2019




Unaudited




LIABILITIES AND STOCKHOLDERS' EQUITY
















CURRENT LIABILITIES:








Trade payables


$

1,999


$

1,656


Deferred revenues



1,285



1,223


Operating lease liabilities



285



317


Other accounts payable and accrued expenses



2,283



2,024










Total current liabilities



5,852



5,220










OPERATING LEASE LIABILITIES



258



455










STOCKHOLDERS' EQUITY








Common Stock of $0.0001 par value – Authorized: 160,000,000 
     shares at September 30, 2020 (unaudited) and December 31, 2019; 
     Issued and Outstanding: 7,892,308 and 2,235,649 shares at 
     September 30, 2020 (unaudited) and December 31, 2019, 
     respectively)



-



-


Preferred Stock of $0.0001 par value - Authorized: 5,000,000 shares at 
     September 30, 2020 (unaudited) and December 31, 2019; Issued and 
     Outstanding: 15,879 and 21,375 shares at September 30, 2020 
     (unaudited) and December 31, 2019, respectively



-



-


Additional paid-in capital



168,618



129,039


Accumulated deficit



(133,584)



(110,145)










Total stockholders' equity



35,034



18,894










Total liabilities and stockholders' equity


$

41,144


$

24,569


 

 



DARIOHEALTH CORP.


CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS


U.S. dollars in thousands (except stock and stock data)






Three months ended

September 30



Nine months ended

September 30




2020



2019



2020



2019




Unaudited



Unaudited


Revenues


$

2,042



$

1,868



$

5,496



$

5,761


Cost of revenues



1,493




995




3,532




4,004



















Gross profit



549




873




1,964




1,757



















Operating expenses:

















Research and development


$

954



$

859



$

3,010



$

2,852


Sales and marketing



3,635




1,865




10,334




8,804


General and administrative



2,562




948




9,459




3,625



















Total operating expenses



7,151




3,672




22,803




15,281



















Operating loss



(6,602)




(2,799)




(20,839)




(13,524)



















Total financial expenses (income), net



(52)




6




(391)




39

















-


Net loss


$

(6,550)



$

(2,805)



$

(20,448)



$

(13,563)



















Deemed dividend


$

930



$

-



$

2,991



$

-



















Net loss attributable to holders of Common
Stock


$

(7,480)



$

(2,805)



$

(23,439)



$

(13,563)



















Net loss per Common Stock:


































Basic and diluted net loss per Common Stock


$

(0.71)



$

(1.11)



$

(2.95)



$

(5.52)


Weighted average number of shares of Common
Stock used in computing basic and diluted net
loss per Common Stock)



7,328,420




2,536,513




4,856,115




2,455,092


 

 

DARIOHEALTH CORP.


CONSOLIDATED STATEMENTS OF CASH FLOWS


U.S. dollars in thousands






Nine months ended

September 30,




2020



2019




Unaudited


Cash flows from operating activities:









Net loss


$

(20,448)



$

(13,563)


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



8,988




1,928


Depreciation



140




138


Change in operating lease right of use assets



224




160


Decrease (increase) in trade receivables



129




(351)


Decrease (increase) in accounts receivables and prepaid expenses and
long-term assets



(338)




199


Increase in inventories



(158)




(96)


Increase (decrease) in trade payables



343




(1,168)


Increase (decrease) in other accounts payable and accrued expenses



311




(580)


Increase in deferred revenues



62




575


Change in operating lease liabilities



(229)




(115)











Net cash used in operating activities



(10,976)




(12,873)











Cash flows from investing activities:









Investment in deposit



(4)




(8)


Purchase of property and equipment



(69)




(79)











Net cash used in investing activities



(73)




(87)











Cash flows from financing activities:









Proceeds from issuance of Common Stock, warrants and warrant
exercises, net of issuance costs



27,548




6,558











Net cash provided by financing activities



27,548




6,558











Increase (decrease) in cash, cash equivalents and short-term restricted bank
deposits



16,499




(6,402)


Cash, cash equivalents and short-term restricted bank deposits at beginning
of the period



20,535




11,126











Cash, cash equivalents and short-term restricted bank deposits at end of the
period


$

37,034



$

4,724


 

 

Reconciliation of Revenue to Billing (Non-GAAP)

U.S. dollars in thousands




Three Months Ended

September 30,


Nine Months Ended

September 30,



2020


2019


2020


2019










GAAP Revenue


$2,042


$1,868


$5,496


$5,761

Add:









Change in Deferred
Revenue


$15


$(87)


$62


$575










Billings (Non-GAAP)


$2,057


$1,781


$5,558


$6,336










 

 

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, 2020



GAAP

Stock-Based
Compensation
Expenses

Depreciation of
Fixed Assets and
Deferred
Inventory

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)

 

Three months ended September 30, 2019








GAAP

Stock-Based
Compensation
Expenses

Depreciation of
Fixed Assets

Non-GAAP

Cost of Revenues

$

995

$

(25)

$

(28)

$

942

Gross Profit


873


25


28


926










Research and development


859


(87)


(6)


766

Sales and Marketing


1,865


(136)


(9)


1,720

General and Administrative


948


(370)


(2)


576

Total Operating Expenses


3,672


(593)


(17)


3,062

Operating Loss

$

(2,799)

$

618

$

45

$

(2,136)

Financing expenses


6






6

Net Loss

$

(2,805)

$

618

$

45

$

(2,142)










 

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)










 

Nine months ended September 30, 2019



GAAP

Stock-Based
Compensation
Expenses

Depreciation of
Fixed Assets

Non-GAAP

Cost of Revenues

$

4,004

$

(82)

$

(85)

$

3,837

Gross Profit


1,757


82


85


1,924










Research and development


2,852


(198)


(18)


2,636

Sales and Marketing


8,804


(231)


(28)


8,545

General and Administrative


3,625


(1,417)


(7)


2,201

Total Operating Expenses


15,281


(1,846)


(53)


13,382

Operating Loss

$

(13,524)

$

1,928

$

138

$

(11,458)

Financing expenses


6


-


-


6

Net Loss

$

(13,530)

$

1,928

$

138

$

(11,464)










 

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

Logo - http://mma.prnewswire.com/media/544126/DarioHealth_Logo.jpg

 

 

 

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SOURCE DarioHealth Corp.

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