DarioHealth Reports Fourth Quarter and Full Year 2020 Results and Operational Highlights

·20 min read

Significant progress across all pillars of long term strategic operating plan

Successfully secured multiple accounts in the B2B channel which are already enrolling members and generating revenue

Upright acquisition expands digital therapeutics offering to include musculoskeletal, attracting interest from existing and prospective B2B2C customers

Completed financing with elite healthcare funds provides capital to execute on growth initiatives with cash and cash equivalents of approximately $90 million at closing of the financing

Company to host conference call and webcast 8:30 am ET today.

NEW YORK, March 9, 2021 /PRNewswire/ -- DarioHealth Corp. (Nasdaq: DRIO), a pioneer in the global digital therapeutics market, today reported financial results for the fourth quarter and full year 2020 and provided a corporate and commercial update.

Dario Health
Dario Health

"The year 2020 was transformational for our company, as we made significant progress across all three pillars of growth: our transformation to a software as a service (SaaS) business model with high margin recurring revenues; our transition to a Business-to-Business-to-Consumer (B2B2C) focused digital therapeutics provider with larger member pools and lower customer acquisition costs; and the ongoing expansion of our product offering to manage multiple chronic conditions," stated Erez Raphael, Chief Executive Officer of Dario. "We won multiple contracts during the year that I believe validate our transition to B2B2C and provide a foundation for meaningful growth in 2021. We believe that our successful implementation and penetration of these contracts will contribute to growing revenue throughout 2021.

"A major highlight since our last quarterly update has been our acquisition of Upright in January 2021, which adds a best-in-class musculoskeletal offering to our digital platform. Expansion into MSK allows us to address a top priority among health plans and self-insured employers and address conditions with significant comorbidity with our existing conditions. We anticipate expanding into additional conditions in the future to enable us to provide a robust offering that addresses our customers' needs and provide the best personalized experience for our members. With cash and cash equivalents of approximately $90 million, we have the capital resources to continue to execute on our vision," Mr. Raphael concluded.

"The fourth quarter continued our successful transition into the Business-to-Business (B2B) market with employer and health system wins, the expansion of our sales management team, the expansion of our offering into MSK and an expansion of our pipeline to more than $600 million. We are very pleased with the progress that we have made in less than a year. We expect we will launch customers in all three of our market segments in 2021 as a result of the significant efforts that the team has taken in 2020," stated Rick Anderson, President and General Manager North America. "As we enter 2021, we have already launched, and are generating revenue from, all of the contracts that we have previously announced. Early enrollment has been robust and consistent with our expectations. We believe that these customer launches will contribute, along with anticipated additional contracts, to growing revenue in 2021 and beyond."

Q4 2020 and Recent Highlights

4th Quarter Highlights:

  • Contracted with a U.S.-based Fortune 500 technology company to provide Dario's diabetes and hypertension solutions.

  • Entered into an agreement to provide its digital therapeutics solution to eligible employees of a subsidiary of a U.S. based Fortune 500 technology and engineering company. This represents the first client secured through DarioHealth's previously announced partnership with Vitality Group.

  • Entered into an agreement to provide its remote patient monitoring (RPM) solution to Presbyterian Medical Services, one of the largest integrated healthcare systems in the State of New Mexico, following a rigorous request for proposal (RFP) process in which Dario's RPM solution was evaluated alongside several other digital therapeutics platforms. Acquired Upright, a leading musculoskeletal-focused digital health provider to expand our digital therapeutics portfolio, added approximately 90,000 users to our platform and was significantly accretive to revenue. Successfully raised gross proceeds of $70.0 million through a private placement of shares of common stock concurrent with the acquisition of Upright.

  • Expanded our commercial management team through the addition of experienced industry veterans to lead our benefit consultant and employer sales.

  • Appointed Dr. Marilyn Ritholz and Dr. David Horwitz to the Company's Scientific Advisory Board (SAB), advancing Dario's technical leadership and helping to guide the development of its technology roadmap.

  • Presented results from a new clinical study of 940 users of the Dario digital therapeutics platform at the 20th Annual Diabetes Technology Society Meeting (DTS), which showed a marked reduction in the percentage of high blood glucose readings and in the average blood glucose readings in adults over the age of 65 years.

Fourth Quarter 2020 Results Summary

Revenues for the fourth quarter ended December 31, 2020 were $2.08 million, a 1.9% sequential increase from third quarter ended September 30, 2020, and a 15.7% increase from the $1.8 million in the fourth quarter ended December 31, 2019.

Revenues generated during the fourth quarter and year ended December 31, 2020 were derived mainly from the sales of DarioHealth's medical devices and consumables and from the offering of our membership plans to our customers in the U.S.

Gross profit in the fourth quarter of 2020 was $549,000, a decrease of $291,000, or 34.6%, compared to gross profit of $840,000 in the fourth quarter of 2019. Gross profit as a percentage of revenues decreased from 46.7% in the fourth quarter of 2019 to 26.4% in the fourth quarter of 2020. The decrease resulted from a price reduction of medical devices sold as part of the direct-to-consumer promotion campaigns.

Total operating expenses for the fourth quarter of 2020 were $9.6 million compared with $5.0 million for the fourth quarter of 2019, an increase of $4.6, or 91.5%. The increase resulted from an increase in our activities in research and development, sales and marketing, administrative expenses and stock-based compensation. Total operating expenses excluding stock-based compensation for the fourth quarter of 2020 were $7.5 million compared to $4.6 million for the fourth quarter of 2019.

Operating loss for the fourth quarter of 2020 was $9.1 million, an increase of $4.9 million, or 117%, compared to the $4.2 million operating loss in the fourth quarter of 2019. This increase was mainly due to the increase in our operating expenses.

Net loss was $9.0 million in the fourth quarter of 2020, an increase of $4.83 million, or 116%, compared to the $4.17 million net loss in the fourth quarter of 2019.

Cash and cash equivalents totaled $28.6 million at December 31, 2020.

Non-GAAP billings for the three months ended December 31, 2020 were $2.02 million, an 18.1% increase from $1.71 million reported in the three months ended December 31, 2019. The increase is a result of higher sales generated in the three months ended December 31, 2020 compared to the three months ended December 31, 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."

Full Year 2020 Results Summary

For the twelve months ended December 31, 2020, revenues were $7.58 million, a 0.2% increase from revenues of $7.56 million for the twelve months ended December 31, 2019.

Gross profit was $2.51 million in the twelve months ended December 31, 2020, a decrease of $84,000, or 3.2%, from $2.6 million gross profit recorded in the twelve months ended December 31, 2019. Gross profit as a percentage of revenues decreased from 34.4% in the twelve months ended December 31, 2019 to 33.2% in the twelve months ended December 31, 2020. The decrease is mainly due to higher shipping expenses of our devices and consumables.

Total operating expenses for the year ended December 31, 2020 were $32.4 million compared with $20.3 million for the year ended December 31, 2019, representing an increase of $12.1 million, or 60%. The increase is attributable mainly to the increase in our stock-based compensation for the year ended December 31, 2020 compared to the year ended December 31, 2019. Total operating expenses excluding stock-based compensation for the year ended December 31, 2020 were $21.3 million compared to $18 million for the year ended December 31, 2019, representing an increase of $3.3 million, or 18.4%.

Operating loss for the twelve months ended December 31, 2020 was $29.9 million, compared to $17.7 million net loss in the twelve months ended December 31, 2019, representing an increase of $12.2 million, or 69%. This increase was mainly due to the increase in our operating expenses.

Net loss was $29.4 million in the year ended December 31, 2020, compared to $17.7 million net loss in the year ended December 31, 2019.

Non-GAAP billings for the twelve months ended December 31, 2020 were $7.58 million, compared with $8.05 million in the twelve months ended December 31, 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: Tuesday, March 9, 8:30am ET

Dial-in Number: 877-451-6152
International Dial-in: 201-389-0879
Conference ID: DarioHealth Fourth Quarter 2020 and Annual Results Call
Webcast: http://public.viavid.com/index.php?id=143705

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 April 9, 2021. To listen to the replay, dial 844-512-2921 (domestic) or 412-317-6671 (international) and use replay passcode 13716928. 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/.

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 multiple contract wins validate its transition to B2B2C and provides a foundation for meaningful growth in 2021, the belief that that its successful implementation and penetration of these contracts will contribute to revenue growth throughout 2021, that it expects to expand its product offering to include additional conditions, the expansion into MSK will allow it to address a top priority among health plans and self-insured employers, that it expects to launch customers in all three of its market segments in 2021 and the belief that its existing enrollments from current agreements and its anticipated additional contracts will lead to growing revenue in 2021 and beyond. 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











December 31,



2020



2019

ASSETS
















CURRENT ASSETS:








Cash and cash equivalents


$

28,590



$

20,395

Short-term restricted bank deposits



187




191

Trade receivables



124




672

Inventories



2,293




1,414

Other accounts receivable and prepaid expenses



2,934




267









Total current assets



34,128




22,939









NON-CURRENT ASSETS:








Deposits



20




17

Operation lease right of use assets



498




765

Long-term assets



185




200

Property and equipment, net



576




648









Total non-current assets



1,279




1,630









Total assets


$

35,407



$

24,569

DARIOHEALTH CORP.

CONSOLIDATED BALANCE SHEETS

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











December 31,



2020



2019

LIABILITIES AND STOCKHOLDERS' EQUITY
















CURRENT LIABILITIES:








Trade payables


$

2,480



$

1,656

Deferred revenues



1,224




1,223

Operating lease liabilities



310




317

Other accounts payable and accrued expenses



3,020




2,024









Total current liabilities



7,034




5,220









OPERATING LEASE LIABILITIES



222




455









STOCKHOLDERS' EQUITY








Common Stock of $0.0001 par value - Authorized: 160,000,000 shares at
December 31, 2020 and 2019; Issued and Outstanding: 8,119,493 and
2,235,649 shares at December 31, 2020 and 2019, respectively



*) -




*) -

Preferred Stock of $0.0001 par value - Authorized: 5,000,000 shares at
December 31, 2020 and 2019; Issued and Outstanding: 15,823 and
21,375 shares at December 31, 2020 and 2019, respectively



*) -




*) -

Additional paid-in capital



171,399




129,039

Accumulated deficit



(143,248)




(110,145)









Total stockholders' equity



28,151




18,894









Total liabilities and stockholders' equity


$

35,407



$

24,569

DARIOHEALTH CORP.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

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











Year ended

December 31,



2020



2019

Revenues


$

7,576



$

7,559

Cost of revenues



5,063




4,962









Gross profit



2,513




2,597









Operating expenses:








Research and development


$

4,433



$

3,692

Sales and marketing



15,227




11,127

General and administrative



12,756




5,483









Total operating expenses



32,416




20,302









Operating loss



29,903




17,705









Total financial (income) expenses, net



(458)




31









Net loss


$

29,445



$

17,736









Deemed dividend



3,658




3,155









Net loss attributable to holders of Common Stock


$

33,103



$

20,891









Net loss per share:
















Basic and diluted loss per share


$

4.01



$

8.00

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



5,963,305




2,266,135

DARIOHEALTH CORP.

CONSOLIDATED STATEMENTS OF CASH FLOWS

U.S. dollars in thousands











Year ended
December 31,



2020



2019

Cash flows from operating activities:








Net loss


$

(29,445)



$

(17,736)

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



11,102




2,257

Depreciation



190




183

Change in operating lease right of use assets



267




368

Decrease (increase) in trade receivables



548




(504)

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



(1,152)




124

Increase in inventories



(879)




(37)

Increase (decrease) in trade payables



824




(918)

Increase in other accounts payable and accrued expenses



1,048




371

Increase in deferred revenues



1




487

Change in operating lease liabilities



(240)




(320)









Net cash used in operating activities



(17,736)




(15,725)









Cash flows from investing activities:








Investment in deposits



(4)




(15)

Purchase of property and equipment



(118)




(98)

Loan Receivables



(1,500)













Net cash used in investing activities



(1,622)




(113)









Cash flows from financing activities:








Proceeds from issuance of Common Stock, warrants, warrant exercises
and Preferred Stock in 2019 private placement, net of issuance costs



27,548




25,247









Net cash provided by financing activities



27,548




25,247









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



8,190




(9,409)

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



20,535




11,126









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


$

28,725



$

20,535

Reconciliation of Revenue to Billing (Non-GAAP)

U.S. dollars in thousands












Year Ended

December 31,


Three Months Ended

December 31,



2020


2019


2020


2019










GAAP Revenue


7,576


7,559


2,080


1,798

Add:









Change in deferred revenue


1


487


(61)


(88)










Billing (Non-GAAP)


7,577


8,046


2,019


1,710










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 December 31, 2020











GAAP

Stock-Based Compensation Expenses

Depreciation of Fixed Assets

Non-GAAP

Cost of Revenues

$

1,531


(11)


(29)


1,491

Gross Profit


549


11


29


589










Research and development


1,423


(233)


(7)


1,183

Sales and Marketing


4,893


(474)


(9)


4,410

General and Administrative


3,297


(1,396)


(5)


1,896

Total Operating Expenses


9,613


(2,103)


(21)


7,489

Operating Loss

$

(9,064)


2,114


50


(6,900)

Financing income


(67)


-


-


(67)

Net Loss

$

(8,997)


2,114


50


(6,833)











Three months ended December 31, 2019











GAAP

Stock-Based Compensation Expenses

Depreciation of Fixed Assets

Non-GAAP

Cost of Revenues

$

958


23


(28)


953

Gross Profit


840


(23)


28


845










Research and development


840


(38)


(6)


796

Sales and Marketing


2,323


(69)


(9)


2,245

General and Administrative


1,858


(304)


(2)


1,552

Total Operating Expenses


5,021


(411)


(17)


4,593

Operating Loss

$

(4,181)


388


45


(3,748)

Financing income


(8)


-


-


(8)

Net Loss

$

(4,173)


388


45


(3,740)











Year ended December 31, 2020











GAAP

Stock-Based Compensation Expenses

Depreciation of Fixed Assets

Non-GAAP

Cost of Revenues

$

5,063


(35)


(116)


4,912

Gross Profit


2,513


35


116


2,664










Research and development


4,433


(824)


(25)


3,584

Sales and Marketing


15,227


(2,741)


(34)


12,452

General and Administrative


12,756


(7,502)


(15)


5,239

Total Operating Expenses


32,416


(11,067)


(74)


21,275

Operating Loss

$

(29,903)


11,102


190


(18,611)

Financing income


(458)


-


-


(458)

Net Loss

$

(29,445)


11,102


190


(18,153)











Year ended December 31, 2019











GAAP

Stock-Based Compensation Expenses

Depreciation of Fixed Assets

Non-GAAP

Cost of Revenues

$

4,962


(59)


(113)


4,790

Gross Profit


2,597


59


113


2,769










Research and development


3,692


(236)


(24)


3,432

Sales and Marketing


11,127


(300)


(37)


10,790

General and Administrative


5,483


(1,721)


(9)


3,753

Total Operating Expenses


20,302


(2,257)


(70)


17,975

Operating Loss

$

(17,705)


2,316


183


(15,206)

Financing expenses


31


-


-


31

Net Loss

$

(17,736)


2,316


183


(15,237)










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

Cision
Cision

View original content:http://www.prnewswire.com/news-releases/dariohealth-reports-fourth-quarter-and-full-year-2020-results-and-operational-highlights-301243014.html

SOURCE DarioHealth Corp.