DarioHealth Reports Results for Third Quarter 2019

    Oct 28, 2019

    NEW YORK and CAESAREA, Israel, Oct. 28, 2019 /PRNewswire/ -- Global digital therapeutics innovator DarioHealth Corp. (Nasdaq: DRIO), today reported financial and operational results for the third quarter ended September 30, 2019.

    • Q3 2019 Revenues of $1.87 million, a 13% sequential increase over Q2 2019, and a 0.6% decrease compared to Q3 2018
    • Q3 2019 Gross Profit of $873,000, representing 46.7% of revenues, a sequential increase of 168% over Q2 2019, and an 86% increase over Q3 2018
    • Operating Loss in Q3 2019 decreased by $1.25 million to $2.8 million, a sequential decline of 48% compared to Q2 2019 and a 31% decrease compared to Q3 2018
    • Dario demonstrated strategic interest in its platform with potential revenue generating possibly beginning in the first half of 2020, Dance Biopharma partnership and exciting pipeline of potential additional opportunities
    • Results reflect and support Dario's strategic push into business-to-business (B2B), as sequential revenue growth and client wins were generated in combination with a lower expense structure 

    CEO, Erez Raphael, stated, "In the third quarter, we believe that we produced tangible evidence that broadening our focus from the direct-to-consumer (D2C) channel alone to include the B2B channel is working well. We grew Dario's top-line while significantly improving gross margins and reducing losses. This quarter's performance also highlights the potential of our high margin SaaS oriented membership program. As previously mentioned, the resulting benefits of this B2B channel focus are measurable in terms of larger patient adoption, more certain revenue streams and lower customer acquisition costs.

    In July 2019, Dario successfully launched a U.S. Food and Drug Administration cleared hypertension extension of its chronic disease management platform. We're excited about the versatility of our platform and that we can now potentially help 75 million patients in the U.S. who suffer from this condition. We've received initial positive feedback from existing users about their ability to manage both diabetes and hypertension on our digital platform and we are excited to offer our technology to address an additional potential large market opportunity.

    In September 2019, Dario announced its first strategic partnership with a private company, Dance Biopharm Holdings, Inc. Dario's platform will be integrated with Dance's smart inhaler to provide patients with automated, real-time treatment data through our advanced mobile application. This partnership may generate revenues in 2020 and beyond. We believe this partnership will be the first of many as we seek to combine our technology with other therapeutic, device and service offerings. We believe this highlights the compatibility and versatility of Dario's digital chronic condition management platform to integrate with other devices to assist in managing other diseases.         

    Finally, we continued to win new clients and increase the pipeline of payers, employers, and providers who want an integrated solution that provides value and accountability driven healthcare, enabled by Dario's user-centric and evidence-based platform.

    Management's continued acceptance of a portion of its compensation in shares is another ongoing contributor to a reduced cash burn and a reflection of our management's belief in Dario's future.

    As we assess the global healthcare market and Dario's place in it, we are confident that we have built a platform technology which will deliver better care at a lower cost for patients with chronic diseases.

    Financial Results for the Three Months Ended September 30, 2019:

    Revenue for the third quarter ended September 30, 2019 was $1.87 million, a 13% sequential increase over Q2 2019 and a 0.6% decrease from $1.88 million in the third quarter ended September 30, 2018.

    Gross profit of $873,000, representing 46.7% of revenues, was recorded for the three months ended September 30, 2019, an increase of 86%, or $405,000, compared to gross profit of $468,000 for the three months ended September 30, 2018.

    Operating loss for the three months ended September 30, 2019 decreased by $1.25 million to $2.8 million, as compared to a $4.5 million operating loss for the three months ended September 30, 2018.

    Net loss attributable to holders of common stock decreased by $1.26 million to $2.8 million for the three months ended September 30, 2019, as compared to $4.1 million for the three months ended September 30, 2018.

    Our new B2B focus has allowed us to be more efficient with our use of cash, extending our runway of existing balance sheet resources.

    As of September 30, 2019, cash and cash equivalents totaled approximately $4.6 million.

    Non-GAAP billings for the three months ended September 30, 2019 were $1.78 million, a 20% decrease from $2.2 million in 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, 2019:

    Revenue for the nine months ended September 30, 2019 was $5.76 million, a 1.2% increase from $5.69 million for the nine months ended September 30, 2018.

    Gross profit of $1.76 million was recorded for the nine months ended September 30, 2019, an increase of 14%, or $215,000, compared to gross profit of $1.54 million for the nine months ended September 30, 2018.

    Operating loss for the nine months ended September 30, 2019 increased by $762,000 to $13.5 million, compared to a $12.8 million operating loss for the nine months ended September 30, 2018.

    Net loss attributable to holders of common stock increased by $743,000 to $13.56 million for the nine months ended September 30, 2019, as compared to $12.82 million for the nine months ended September 30, 2018.

    Non-GAAP billings for the nine months ended September 30, 2019 were $6.34 million, a 4.2% increase from $6.08 million in 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."

    A Company investor presentation is available at: http://mydario.investorroom.com/

    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, please go to: http://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 the Company describes its belief that the third quarter produced tangible evidence that broadening its focus from the D2C channel to the B2B channel is working well, that the Company is excited to offer its hypertension extension product to address a potential large market opportunity, that its partnership with Dance Biopharma may generate revenues in the first half of 2020 and beyond, its belief that such partnership will be the first of many to combine the Company's technology with other therapeutic, device and service offerings and that such partnership highlights the compatibility and versatility of Dario's platform with other devices to assist in managing other diseases and the belief that management is confident that it has built a platform technology which will deliver better care at a lower cost for patients with chronic diseases. 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.

     

    DARIOHEALTH CORP. 
    CONSOLIDATED BALANCE SHEETS
    U.S. dollars in thousands




    September
    30,



    December
    31,




    2019



    2018




    Unaudited





    ASSETS


















    CURRENT ASSETS:









    Cash and cash equivalents


    $

    4,585



    $

    10,997


    Restricted bank deposits



    189




    180


    Trade Receivables



    519




    168


    Inventories



    1,473




    1,377


    Other accounts receivable and prepaid expenses



    392




    591











    Total current assets



    7,158




    13,313











    LEASE DEPOSITS



    52




    43











    OPERATING LEASE RIGHT OF USE ASSET



    719




    -











    PROPERTY AND EQUIPMENT, NET



    674




    733


    Total assets


    $

    8,603



    $

    14,089


     


     

    DARIOHEALTH CORP. 
    CONSOLIDATED BALANCE SHEETS
    U.S. dollars in thousands (except stock and stock data)



    September 30,



    December 31,




    2019



    2018




    Unaudited





    LIABILITIES AND STOCKHOLDERS' EQUITY


















    CURRENT LIABILITIES:









    Trade payables


    $

    1,406



    $

    2,574


    Deferred revenues



    1,311




    736


    Operating lease liability



    287




    -


    Other accounts payable and accrued expenses



    1,215




    1,854











    Total current liabilities



    4,219




    5,164











    OPERATING LEASE LIABILITY



    477




    -











    STOCKHOLDERS' EQUITY









    Common Stock of $0.0001 par value –
    Authorized: 160,000,000 shares at September 30, 2019  (unaudited) and
    December 31, 2018; Issued and Outstanding: 43,683,840 and 36,607,755
    shares at September 30, 2019 (unaudited) and December 31, 2018, respectively



    8




    8


    Preferred Stock of $0.0001 par value -
    Authorized: 5,000,000 shares at September 30, 2019 (unaudited) and
    December 31, 2018; Issued and Outstanding: None at September 30, 2019
    (unaudited) and December 31, 2018



    -




    -


    Additional paid-in capital



    106,716




    98,171


    Accumulated deficit



    (102,817)




    (89,254)


    Total stockholders' equity



    3,907




    8,925


    Total liabilities and stockholders' equity


    $

    8,603



    $

    14,089


     


     

    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




    2019



    2018



    2019



    2018




    Unaudited



    Unaudited


    Revenues


    $

    1,868



    $

    1,879



    $

    5,761



    $

    5,694


    Cost of revenues



    995




    1,411




    4,004




    4,152



















    Gross profit



    873




    468




    1,757




    1,542



















    Operating expenses:

















    Research and development


    $

    859



    $

    997



    $

    2,852



    $

    2,749


    Sales and marketing



    1,865




    2,816




    8,804




    7,049


    General and administrative



    948




    709




    3,625




    4,506



















    Total operating expenses



    3,672




    4,522




    15,281




    14,304



















    Operating loss



    (2,799)




    (4,054)




    (13,524)




    (12,762)



















    Financial expenses, net:

















    Revaluation of warrants



    -




    *)-




    -




    1


    Other financial expense, net



    (6)




    (9)




    (39)




    (59)



















    Total financial expenses, net



    (6)




    (9)




    (39)




    (58)



















    Net loss


    $

    (2,805)



    $

    (4,063)



    $

    (13,563)



    $

    (12,820)



















    Deemed dividend related to warrant exchange


    $

    -



    $

    -



    $

    -



    $

    493


    Net loss attributable to holders of Common Stock


    $

    (2,805)



    $

    (4,063)



    $

    (13,563)



    $

    (13,313)



















    Net loss per share


































    Basic and diluted loss per share


    $

    (0.06)



    $

    (0.17)



    $

    (0.28)



    $

    (0.67)


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



    50,730,253




    23,533,328




    49,101,850




    19,733,291


     


     

    DARIOHEALTH CORP. 
    CONSOLIDATED STATEMENTS OF CASH FLOWS
    U.S. dollars in thousands



    Nine months ended
    September 30,




    2019



    2018




    Unaudited


    Cash flows from operating activities:









    Net loss


    $

    (13,563)



    $

    (12,820)


    Adjustments required to reconcile net loss to net cash used in operating activities:









    Stock-based compensation and Common Stock to service providers



    1,928




    3,284


    Depreciation



    138




    160


    Amortization of operating lease right of use



    160




    -


    Increase is trade receivables



    (351)




    (92)


    Decrease in accounts receivables and prepaid expenses



    199




    81


    Decrease (increase) in inventories



    (96)




    164


    Increase (decrease) in trade payables



    (1,168)




    351


    Increase (decrease) in other accounts payable and accrued expenses



    (580)




    457


    Increase in deferred revenues



    575




    385


    Change in operating lease liability



    (115)




    -


    Change in fair value of warrants to purchase shares of Common Stock



    -




    (1)











    Net cash used in operating activities



    (12,873)




    (8,031)











    Cash flows from investing activities:









    Maturities (investment) of restricted bank deposit



    (9)




    74


    Investment in lease deposits



    (9)




    (5)


    Purchase of property and equipment



    (79)




    (49)











    Net cash provided by (used in) investing activities



    (97)




    20











    Cash flows from financing activities:









    Proceeds from issuance of Common Stock, Preferred Stock and warrants, net of issuance cost



    6,558




    15,720











    Net cash provided by financing activities



    6,558




    15,720











    Increase (decrease) in cash and cash equivalents



    (6,412)




    7,709


    Cash and cash equivalents at the beginning of the period



    10,997




    3,718











    Cash and cash equivalents at the end of the period


    $

    4,585



    $

    11,427











    Non-cash investing and financing activities:


















    Payment for directors and consultants under Shares for Salary Program


    $

    59



    $

    286


     


     

    DARIOHEALTH CORP. 
    Reconciliation of Revenue to Billings (Non-GAAP)
    U.S. dollars in thousands



    Three Months Ended

    September 30,


    Nine Months Ended

    September 30,



    2019


    2018


    2019


    2018










    GAAP Revenues


    $1,868


    $1,879


    $5,761


    $5,694

    Add:









    Change in Deferred Revenues


    ($87)


    $335


    $575


    $385










    Billings (Non-GAAP)


    $1,781


    $2,214


    $6,336


    $6,079










     

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


     

    SOURCE DarioHealth Corp.