DarioHealth reports second quarter 2020 results

DarioHealth Corp., a pioneer in the global digital therapeutics market, today reported financial results for the second quarter 2020 and provided a corporate and commercial update.

“The COVID-19 pandemic has accelerated our ongoing transformation to a business-to-business-to-consumer (B2B2C) digital therapeutics leader,” said Erez Raphael, Chief Executive Officer of Dario. “We advanced late-stage discussions with health plans and self-insured employers, who we believe recognize how our industry-leading user engagement and satisfaction metrics lead to improved health for their member and employee populations. Our pipeline continues to grow and mature, and although the normal sales cycle can be lengthy, we believe that we are poised to announce new and potentially transformational agreements in the next few weeks.”

“At the same time, our Remote Patient Monitoring (RPM) product offering, which was just recently introduced, is seeing significant traction as evidenced by recently announced agreements in the U.S. and U.K. with more potential agreements in the pipeline.”

“We believe that the expert webinar that we hosted in June featuring Key Opinion Leader (KOL) Dr. David Simmons, a diabetologist with 45 years of experience, reinforced the importance of digital therapeutics as a complement to current standards of care across the entire spectrum of chronic medical conditions. His work and expertise highlighted how behavior change, the core of the Dario platform, is at the root of improved health for the type 2 diabetes (T2D) population. At the American Diabetes Association’s 80^th Scientific Sessions, Dario added to its growing body of evidence with its presentation of the results of two studies demonstrating that digital therapeutics deliver tangible, sustainable health benefits to patients and cost savings to payers.”

“We believe that recent industry mergers and acquisitions transactions are indicative of the value that is being created in digital therapeutics. As a platform that aids in chronic condition management while facilitating acute care interactions, we believe that Dario has the potential to be a leading platform in the future virtual healthcare world. With a flexible, software based recurring revenue model that can scale, we believe that Dario can deliver improved care and reduce systemwide costs for the most expensive patient populations.  We are proud to be a leading innovator in this important and emerging field.”

“With the successful $28.6 million financing that we completed last month, we believe we have the resources in place to achieve significant commercial milestones that we believe will drive accelerating growth and continued improvement of our margins,” Zvi Ben-David, Dario’s Chief Financial Officer added. “In addition, we will continue to improve our platform through enhanced personalization with artificial intelligence (AI), improved efficacy in combination with Continuous Glucose Monitoring (CGM) and expanded breadth of offering for other chronic health conditions.”

Business Update Q2 2020 and Recent Highlights

Opening B2B2C Channels: Commercial Development & Strategic Collaborations

• Announced two Remote Patient Monitoring (RPM) agreements in the U.S., allowing healthcare providers to monitor patients between office visits while utilizing new CMS reimbursement codes, an added source of revenue
• 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

• Hosted a webinar featuring KOL Dr. David Simmons who espoused the importance of digital therapeutics as a complement to traditional care for the long-term management and treatment of patients with diabetes and other chronic diseases
• Participated in the Virtual Going Digital: Behavioral Health Tech Summit which featured a presentation by Dario’s Chief Medical Officer, Dr. Omar Manejwala, entitled, “Behavioral Health at Scale.”
• Presents new studies demonstrating sustained improvements in blood glucose and blood pressure control in users with diabetes and hypertension at the American Diabetes Association’s 80th Scientific Sessions

Corporate Developments

• Appointed Dennis Matheis, President of Optima Health, a health plan with more than 850,000 members, to its Board of Directors, further supporting our ongoing transition to B2B2C
• Successfully raised gross proceeds of $28.6 million through a private placement of its common shares and pre-funded warrants

Second Quarter 2020 Results Summary

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

Revenues for the second quarter ended June 30, 2020 were $1.79 million, a 7.2% sequential increase from first quarter ended March 31, 2020, and an 8.2% increase from the $1.65 million in the second quarter ended June 30, 2019.

Revenues generated during the second quarter ended June 30, 2020 were derived mainly from the sales of DarioHealth’s products and from the offering of our membership plans to our customers in the U.S.

At the end of the second quarter ended June 30, 2020, we accumulated deferred income of $1.27 million that we expect to recognize during the next four fiscal quarters.

Gross profit in the second quarter ended June 30, 2020 was $636,000, an increase of $310,000, or 95%, compared to gross profit of $326,000 in the second quarter ended June 30, 2019. This increase is mainly a result of an increase in revenues generated from our membership offering and a decrease in product costs in the second quarter.

Total operating expenses for the second quarter ended June 30, 2020 were $4.8 million, a decrease of $0.9 million, or 16.3%, compared with $5.7 million for the second quarter ended June 30, 2019. The decrease in the operating expenses was mainly due the decrease in equity-based compensation to directors, employees and service providers.

Operating loss for the second quarter ended June 30, 2020 was $4.1 million, a decrease of $1.2 million, or 23%, compared to a $5.3 million operating loss in the second quarter ended June 30, 2019. This decrease was mainly due to the increase in our gross profit and decrease in our operating expenses.

Net loss attributable to holders of common stock was $4.8 million, or $0.68 per share, in the second quarter ended June 30, 2020, compared to the $5.4 million net loss, or $2.50 per share, in the second quarter ended June 30, 2019.

We had cash and cash equivalents totaling $13.2 million at June 30, 2020.

Non-GAAP billings for the three months ended June 30, 2020 were $1.79 million, a 2.2% decrease from $1.75 million reported in the three months ended June 30, 2019.

Non-GAAP adjusted net loss for the second quarter ended June 30, 2020 was $3.25 million, a 23.7% decrease from a $4.26 million non-GAAP adjusted net loss for 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, 2020:

Revenue for the six months ended June 30, 2020 was $3.45 million, an 11.3% decrease from $3.89 million for the six months ended June 30, 2019. We recorded an additional $47,000 as deferred revenues from revenues generated from our membership offering to our customers in the U.S. This decrease is mainly a result of a decrease in our direct to consumer revenues in the first quarter of 2020 compared to the first quarter of 2019.

Gross profit of $1.4 million was recorded for the six months ended June 30, 2020, an increase of 60% or $531,000 compared to gross profit of $884,000 for the six months ended June 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.

Operating loss for the six months ended June 30, 2020 increased by $3.5 million to $14.2 million, compared to an $10.7 million operating loss for the six months ended June 30, 2019. This increase is a result from an increase in our equity based compensation, consulting, investor relations and insurance expenses partially offset by an increase in our gross profit.

Net loss was $13.9 million for the six months ended June 30, 2020 compared to a net loss of $10.7 million for the six months ended June 30, 2019. The increase in net loss for the six months ended June 30, 2020 compared to the six months ended June 30, 2019 was mainly due to an increase in operating expenses.

Non-GAAP billings for the six months ended June 30, 2020 were $3.5 million, a 23% decrease from $4.55 million in the six months ended June 30, 2019.

Non-GAAP adjusted net loss for the six months ended June 30, 2020 was $7 million, a 24.7% decrease from a $9.3 million non-GAAP adjusted net loss for 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.” – PR Newswire