Health

DarioHealth Reports First Quarter 2021 Results and Operational Highlights

NEW YORK, May 17, 2021 — DarioHealth Corp. (Nasdaq: DRIO), a pioneer in the global digital therapeutics market, today reported financial results for the first quarter of 2021 and provided a corporate and commercial update.

“During the first quarter, we delivered exceptional financial and operating results, driven by balanced contribution from organic growth and the acquisition of Upright Technologies, which we closed on February 2, 2021,” stated Erez Raphael, Chief Executive Officer of Dario. “Our first quarter 2021 revenue of $3.6 million represents growth of 73% sequentially from the fourth quarter of 2020, and 116% year-over-year.

Perhaps more importantly, our first quarter revenues, assuming we acquired Upright Technologies as of January 1, 2021, would have been $4.7 million. At the same time, our gross margin percentage, excluding acquisition related amortization, significantly improved to 44.7% of revenues, as compared to 24.2% in Q4 2020. With over $81 million of cash at the end of the first quarter of 2021, we believe that we are well funded to accelerate our growth trajectory.

“Our acquisition of Upright Technologies allows us to address one of the most significant pain points for health care payers – musculoskeletal and related pain conditions. This acquisition is being integrated in our operations and is already generating significant interest from potential customers in need of a novel MSK solution.

We will continue to expand into additional chronic conditions supporting our vision of being the most comprehensive digital health solution in the industry. I am pleased with our increasing U.S. sales momentum during the first quarter of 2021.  We were especially encouraged by our enrollment, which exceeded 40% and was accomplished at a faster than anticipated rate. We look forward to a very successful year,” Mr. Raphael concluded.

“The three pillars of our growth – pivot to Business-to-Business-to-Consumer (B2B2C), transition to a high margin software-as-a-service (SaaS) model, and expansion into additional chronic conditions – are serving us well and are clearly resonating in the marketplace,” stated Rick Anderson, President and General Manager of North America. “We launched three accounts during the quarter, including two new employers.

Our pipeline currently stands in excess of $700 million and growing especially in our employer market segment. We believe this speaks not only to the breadth and differentiation of our digital health offering, but also to the world-class team and support infrastructure that we have assembled in the U.S.”

Q1 2021 and Recent Highlights

  • Announced acquisition of Upright Technologies, expanding into the musculoskeletal and related pain condition markets;
  • Observed first quarter 2021 revenue of approximately $4.7 million, assuming the acquisition of Upright Technologies closed on January 1, 2021;
  • Announced the creation of a virtual clinic focused on diabetes in partnership with MediOrbis and including Dario’s Remote Patient Monitoring (RPM) services;
  • Appointed Claudia Rimerman Kraut as Vice President of Broker and Consultant Partnerships to lead Dario’s benefit consultant and alliance outreach as part of the self-insured employers and managed care sales organization;
  • Appointed digital health executive and innovator Chris Chan as Senior Vice President of Employer Sales, to lead growth initiatives in the US self-insured employer market;
  • Selected to be the digital health provider by a self-insured, Fortune 500 subsidiary through Dario’s previously announced partnership with Vitality Group; and
  • Published a paper in Journal of Medical Internet Research (JMIR) Diabetes. The paper, “Role of Digital Engagement in Diabetes Care Beyond Measurement: Retrospective Cohort Study,” detailing the results of a clinical study in which increased digital engagement resulted in 43% improvement in blood glucose levels.

First Quarter 2021 Results Summary

Revenues for the first quarter ended March 31, 2021 were $3.6 million, a 73% sequential increase from fourth quarter ended December 31, 2020, and a 116% increase from the $1.7 million in the first quarter ended March 31, 2020.
Revenues generated during the first quarter ended March 31, 2021 were derived mainly from the sales of DarioHealth’s products and services and from the consolidated revenues of Upright commencing February 2, 2021.
Gross profit in the first quarter of 2021 was $1,081,000, an increase of $302,000, or 38.8%, compared to gross profit of $779,000 in the first quarter of 2020. Gross profit margin was 30.1% in the first quarter of 2021 as compared to 46.7% in the first quarter of 2020.
Pro-forma gross profit, excluding $526,000 of amortization of expenses related to the acquisition of Upright Technologies, was $1.6 million. Pro forma gross profit margin, excluding amortization of expenses related to the acquisition of Upright Technologies, was 44.7% in the first quarter of 2021, a sequential increase from 24.2% in Q4 2020.
Total operating expenses for the first quarter of 2021 were $15.4 million compared to $10.9 million for the first quarter of 2020, an increase of $4.5 million, or 41.6%. The increase resulted from an increase in our research and development activities, sales and marketing expenses, and from the consolidation of Upright Technologies, partially offset by a reduction in stock-based compensation.
Operating loss for the first quarter of 2021 was $14.3 million, an increase of $4.2 million, or 41.7%, compared to the $10.1 million operating loss in the first quarter of 2020. This increase was mainly due to the increase in our operating expenses.
Net loss was $15.0 million in the first quarter of 2021, an increase of $5.1 million, or 51.3%, compared to the $9.9 million net loss in the first quarter of 2020.
Cash and cash equivalents totaled $81.1 million at March 31, 2021.
Non-GAAP billings for the three months ended March 31, 2021 were $3.69 million, a 116% increase from $1.71 million reported in the three months ended March 31, 2020. The increase is a result of higher sales generated and the consolidation of Upright revenues in the three months ended March 31, 2021 compared to the three months ended March 31, 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.”
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 June 18, 2021. To listen to the replay, dial 844-512-2921 (domestic) or 412-317-6671 (international) and use replay passcode 13719717. The webcast replay will be available for two months.

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, and for more information, visit https://www.dariohealth.com/.

DARIOHEALTH CORP.

CONSOLIDATED BALANCE SHEETS

U.S. dollars in thousands

March 31, 

December 31, 

2021

2020

Unaudited

ASSETS

CURRENT ASSETS:

Cash and cash equivalents

$

81,171

$

28,590

Short-term restricted bank deposits

245

187

Trade receivables

468

124

Inventories

5,020

2,293

Other accounts receivable and prepaid expenses

1,352

2,934

Total current assets

88,256

34,128

NON-CURRENT ASSETS:

Deposits

20

20

Operation lease right of use assets

492

498

Long-term assets

138

185

Property and equipment, net

722

576

Intangible assets, net

9,225

Goodwill

25,334

Total non-current assets

35,931

1,279

Total assets

$

124,187

$

35,407

DARIOHEALTH CORP.

CONSOLIDATED BALANCE SHEETS

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

March 31, 

December 31, 

2021

2020

Unaudited

LIABILITIES AND STOCKHOLDERS’ EQUITY

CURRENT LIABILITIES:

Trade payables

$

3,426

$

2,480

Deferred revenues

1,387

1,224

Operating lease liabilities

321

310

Other accounts payable and accrued expenses

6,608

3,020

Total current liabilities

11,742

7,034

OPERATING LEASE LIABILITIES

178

222

STOCKHOLDERS’ EQUITY

Common Stock of $0.0001 par value – Authorized: 160,000,000 shares at  March 31, 2021 (unaudited) and December 31, 2020;  Issued and Outstanding: 15,398,851 and 8,119,493 shares at March 31, 2021 (unaudited) and December 31, 2020, respectively

*) –

*) –

Preferred Stock of $0.0001 par value – Authorized: 5,000,000 shares at March 31, 2021 (unaudited)  and December 31, 2020; Issued and Outstanding: 12,400 and 15,823 shares at March 31, 2021 (unaudited)  and December 31, 2020, respectively

*) –

*) –

Additional paid-in capital

271,025

171,399

Accumulated deficit

(158,758)

(143,248)

Total stockholders’ equity

112,267

28,151

Total liabilities and stockholders’ equity

$

124,187

$

35,407

DARIOHEALTH CORP.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

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

Three months ended

March 31, 

2021

2020

Unaudited

Revenues

$

3,595

$

1,667

Cost of revenues

1,988

888

Amortization of acquired intangible assets and inventories step-up

526

Gross profit

1,081

779

Operating expenses:

Research and development

$

2,655

$

1,231

Sales and marketing

7,132

4,091

General and administrative

5,621

5,571

Total operating expenses

15,408

10,893

Operating loss

(14,327)

(10,114)

Total financial (income) expenses, net

639

(222)

Net loss

$

(14,966)

$

(9,892)

Deemed dividend

$

544

$

1,275

Net loss attributable to holders of Common Stock

$

(15,510)

$

(11,167)

Net loss per share:

Basic and diluted net loss per share

$

(0.92)

$

(1.57)

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

14,025,921

3,090,790

DARIOHEALTH CORP.

CONSOLIDATED STATEMENTS OF CASH FLOWS

U.S. dollars in thousands

Three months ended

March 31, 

2021

2020

Unaudited

Cash flows from operating activities:

Net loss

$

(14,966)

$

(9,892)

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

4,438

6,356

Depreciation

64

46

Change in operating lease right of use assets

6

80

Amortization of acquired inventories step-up

151

Amortization of acquired intangible assets

375

Decrease (increase) in trade receivables

318

(102)

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

207

(227)

Decrease (increase) in inventories

(32)

193

Decrease in trade payables

(544)

(417)

Decrease in other accounts payable and accrued expenses

(609)

(523)

Increase in deferred revenues

93

42

Change in operating lease liabilities

(33)

(101)

Net cash used in operating activities

(10,532)

(4,545)

Cash flows from investing activities:

Purchase of property and equipment

(68)

(28)

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

(2,540)

(28)

Cash flows from financing activities:

Proceeds from issuance of common stock, net of issuance costs

64,877

Proceeds from exercise of warrants

633

Proceeds from exercise of options

201

Net cash provided by financing activities

65,711

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

52,639

(4,573)

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

$

81,364

$

15,962

Reconciliation of Revenue to Billing (Non-GAAP)

U.S. dollars in thousands

Three Months Ended

March 31,

2021

2020

GAAP Revenue

3,595

1,667

Add:

Change in deferred revenue

93

42

Billing (Non-GAAP)

3,688

1,709

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 March 31, 2021

GAAP

Stock-based

compensation

expenses

Amortization of

acquisition

related expenses

and depreciation

of fixed assets

Non-GAAP

Cost of Revenues

$

2,514

(13)

(557)

1,944

Gross Profit

1,081

13

557

1,651

Research and development

2,655

(414)

(15)

2,226

Sales and Marketing

7,132

(1,035)

(11)

6,086

General and Administrative

5,621

(2,976)

(385)

2,260

Total Operating Expenses

15,408

(4,425)

(411)

10,572

Operating Loss

$

(14,327)

4,438

968

(8,921)

Financing income

639

639

Net Loss

$

(14,966)

4,438

968

(9,560)

Three months ended March 31, 2020

GAAP

Stock-based

compensation

Expenses

Depreciation of

fixed assets

Non-GAAP

Cost of Revenues

$

888

(15)

(29)

844

Gross Profit

779

15

29

823

Research and development

1,231

(337)

(6)

888

Sales and Marketing

4,091

(1,551)

(8)

2,532

General and Administrative

5,571

(4,453)

(3)

1,115

Total Operating Expenses

10,893

(6,341)

(17)

4,535

Operating Loss

$

(10,114)

6,356

46

(3,712)

Financing income

(222)

(222)

Net Loss

$

(9,892)

6,356

46

(3,490)

This article was shared with Prittle Prattle News as a Press Release by PRNewswire.

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