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DarioHealth Reports Results For Second Quarter 2019

Global digital therapeutics innovator DarioHealth Corp. (Nasdaq: DRIO), today reported financial and operational results for the second quarter ended June 30, 2019.

CEO, Erez Raphael, stated, “During this quarter, we strengthened our platform technology by expanding its application to hypertensive patients, presenting new significant data for people with diabetes that supports meaningful clinical outcomes and increases the basic functionality through its use on the Android phone in Europe. All of these initiatives created a better technology for a broader patient base who benefit from active management of their chronic diseases.

During this quarter, we witnessed concrete evidence from our pipeline of payers, employers, and providers of their growing demand for value and accountability driven healthcare, enabled by the user-centric and evidence-based solutions that Dario provides.

As our focus shifts to take advantage of these market tailwinds and our business-to-business (B2B) pipeline activity accelerates, we will continue to support our direct-to-consumer (D2C) sales and marketing initiatives but with budgets weighted towards broader B2B business development. The resulting benefits will be measurable in terms of larger patient adoption, more certain revenue streams and lower customer acquisition costs.

While this evolution of our business model may result in reduced near term revenues such as in this quarter, we are confident that in the long term our product and this strategy will maximize its market adoption for patient-centric management of chronic diseases. We believe that the maturity of our B2B pipeline will soon allow us to resume the type of double-digit quarterly growth experienced in the first quarter of this year.

This balancing of resources from D2C to B2B has the additional benefit of a reduction in our burn-rate. As a result, we expect significant reductions in our net quarterly loss in the second half of 2019.

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 more confident than ever that we have built a platform technology which will deliver better care at a lower cost for patients with chronic diseases.

We are excited to share more developments over the remainder of the year as we continue executing our strategic plan, creating value for all stakeholders.

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

Revenue for the second quarter ended June 30, 2019 was $1.65 million, a 20% decrease from $2.06 million in the second quarter ended June 30, 2018.

Revenue for the second quarter of 2019 included D2C sales in the U.S. and Australia, and product sales to distributors in Canada and the United Kingdom. We recorded an increase of $102,000 as deferred revenues from revenues generated from our membership offering to our customers in the U.S.

Gross profit of $326,000 was recorded for the three months ended June 30, 2019, a decrease of 38% or $196,000compared to gross profit of $522,000 for the three months ended June 30, 2018. This decrease was attributed to lower sales and a one-time expense write-off of our old cartridge production mold for $82,000.

Operating loss for the second quarter of 2019 decreased by $431,000 to $5.36 million, as compared to a $5.8 millionoperating loss in the second quarter ended June 30, 2018.

Net loss attributable to holders of common stock decreased by $456,000 to $5.4 million in the second quarter of 2019, as compared to $5.8 million in the second quarter of 2018.

As of June 30, 2018, cash and cash equivalents totaled approximately $8 million.

Non-GAAP billings for the three months ended June 30, 2019 were $1.75 million, a 17% decrease from $2.1 million in the three months ended June 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 Six Months Ended June 30, 2019:

Revenue for the six months ended June 30, 2019 was $3.9 million, a 2% increase from $3.8 million for the six months ended June 30, 2018. We recorded an additional $662,000 as deferred revenues from revenues generated from our membership offering to our customers in the U.S.

Gross profit of $884,000 was recorded for the six months ended June 30, 2019, a decrease of 18% or $190,000compared to gross profit of $1,074,000 for the six months ended June 30, 2018. This decrease was affected by a one-time expense write-off of our old cartridge production mold for $82,000.

Operating loss for the six months ended June 30, 2019 increased by $2 million to $10.7 million, compared to an $8.7 million operating loss for the six months ended June 30, 2018.

Net loss was $10.76 million for the six months ended June 30, 2019 compared to a net loss of $8.76 million for the six months ended June 30, 2018. The increase in net loss for the six months ended June 30, 2019 compared to the six months ended June 30, 2018 was mainly due to an increase in operating expenses.

Non-GAAP billings for the six months ended June 30, 2019 were $4.55 million, a 18% increase from $3.86 million in the six months ended June 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 Guidance

Dario believes its strategy of focusing more resources in the B2B channel, over time, will lead to broader penetration, higher revenues and greater operating leverage of its sophisticated platform technology for managing chronic diseases. While the B2B market involves longer sales cycles, and initially less predictable revenue streams, Dario will be announcing some new relationships in the coming months as evidence of our work that began in the second quarter of this year. As a result, the Company anticipates higher revenues and reduced losses in the second half of 2019 driven by both continued D2C channels and new B2B channel initiatives. – PR Newswire

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