Full Press Release Details
DarioHealth Reports Second Quarter 2022 Financial
and Operating Results
Company to host conference call and webcast
NEW YORK, August 15, 2022 /PRNewswire/ --
DarioHealth Corp. (Nasdaq: DRIO) ("Dario" or the "Company"), a leader in the global digital therapeutics (DTx) market,
today reported financial results for the second quarter 2022 and provided a corporate and commercial update.
"Dario continues to enjoy tremendous momentum
since establishing our focus on B2B2C customer channels more than two years ago, reflecting the market's increasing demand for integrated,
holistic digital health solutions to manage chronic conditions," stated Erez Raphael, Chief Executive Officer of Dario. "We
now see B2B2C contract values totaling $55 million in the aggregate, demonstrating the strength of our offering as an emerging leader
in the digital therapeutics market."
"A clear highlight since our last quarterly
update is our recent contract with a national health plan to deploy our behavioral health solution through its behavioral health platform,
allowing us to reach approximately ten million additional members. A brief contracting delay with this plan contributed to the decline
in revenue during the second quarter relative to the first quarter. However, we anticipate that this will reverse in the second half of
2022, as this plan has already started contributing revenue in the current quarter."
"Our Direct-to-Consumer (DTC) business was
foundational to the initial development of Dario's platform as it exists today, yielding the data and insights necessary to drive
the product enhancements necessary to create attractive solutions for both employers and health plans. We believe that our strategy and
efforts in the DTC business were a resounding success, as we see the market now demands a comprehensive, clinically proven offering such
as the one we developed."
"Now, given the significant activity we
are experiencing in the B2B2C channel both through direct and partner led initiatives, we need to deploy our human and capital resources
to address value accretive activities in the much larger and more lucrative B2B2C channel - the next stage of our multi-year strategic
plan. As a result, we made the strategic decision during the second quarter to diminish focus on our legacy DTC business while prioritizing
our B2B2C opportunity. This decision had a modest impact on DTC revenue and related expenses in the second quarter. We anticipate that
this impact will continue to lessen the influence of DTC revenue and expenses in the second half of the year while enhancing the long-term
growth opportunity with employers and health plans."
"However, we anticipate this impact will
be temporary as we expect continued strong demand for our B2B2C solutions to more than offset the decrease in DTC revenue, driving overall
revenue growth in 2023 and 2024. Going forward, we expect that this strategic shift will significantly improve our financial profile,
with larger, more stable, recurring revenues from B2B2C pools of users and lower customer acquisition costs, and also result in higher
margins and an extended cash runway," Mr. Raphael concluded.
"We are seeing continued contract and revenue
growth with several off-cycle' employer sales and our previously announced health plans contributing to revenue," stated
Rick Anderson, President of Dario North America. "Our collaboration with Sanofi continues to gain traction, as the Sanofi sales
organization amplifies our efforts and starts to yield health plan and other strategic opportunities. Similarly, our partnership with
Solera Health is off to a strong start, with a large regional health plan in the late contracting phase, offering further evidence of
the value that we can drive through our partner channels. Our pipeline is the richest it has been in the company's history, driven
by the breadth and depth of our integrated, multi-chronic condition platform. We anticipate announcing many more customers from our growing
pipeline over the remainder of the year."
Q2 2022 and Recent Highlights
Second Quarter 2022 Results Summary
Revenues for the second quarter ended June 30,
2022, were $6.2 million, a 17.5% increase from the $5.3 million for the second quarter ended June 30, 2021. The increase in revenues
resulted from higher revenues from the company's commercial market segments, including health plans, employers and providers. Revenues
declined 23.3% sequentially from the first quarter ended March 31, 2022 due to a delay in the signing of one large health plan contract.
Gross profit for the second quarter of 2022 was
$1.1 million, a decrease of $0.4 million, compared to gross profit of $1.5 million for the second quarter of 2021. Gross profit as a percentage
of revenues declined to 18.4% in the second quarter of 2022, from 28.7% in the second quarter of 2021, due to the change in mix of revenue
caused by the aforementioned delay in health plan revenues.
Pro-forma gross profit, excluding $1.1 million
of non-cash amortization of expenses related to the acquisition of technology, was $2.2 million, or 36.1% of revenues, for the three months
ended June 30, 2022, compared to a pro-forma gross profit of $2.6 million, or 49.4% of revenues for the three months ended June 30,
2021. Non-GAAP gross margins for the B2B2C business channel exceeded 70% in the second quarter.
Total operating expenses for the second quarter
of 2022 were $18.5 million compared with $19.5 million for the second quarter of 2021 and $19.8 million for the first quarter of 2022,
a decrease of $1 million, or 5.2%, compared to the second quarter of 2021, and a decrease of $1.3 million, or 6.9%, compared to the first
quarter of 2022. The decrease compared to the first quarter of 2022 resulted from a decrease in our DTC marketing expenses. Total operating
expenses excluding stock-based compensation, acquisition expenses and depreciation for the second quarter of 2022 were $13.4 million compared
to $13.5 million for the second quarter of 2021, and $14.9 million for the first quarter of 2022.
Operating loss for the second quarter of 2022
was $17.4 million, a decrease of $0.6 million, or 3.6%, compared to $18.0 million for the second quarter of 2021, and an increase of $1.5
million, or 9.3%, compared to $15.9 million for the first quarter of 2022. The decrease compared to the second quarter of 2021 was mainly
due to the decrease in operating expenses, and the increase compared to the first quarter of 2022 was mainly due to the decrease in our
Net loss was $18.0 million in the second quarter
of 2022, an increase of $0.2 million, or 1.5%, compared to the $17.8 million net loss in the second quarter of 2021, and an increase of
$2.1 million, or 13.3%, compared to the first quarter of 2022. Net loss excluding stock-based compensation, acquisition expenses and depreciation
for the second quarter of 2022 was $11.8 million compared to $10.6 million for the second quarter of 2021 and $9.9 million in the first
Non-GAAP billings for the three months ended June 30,
2022, were $6.1 million, a 19% increase from $5.1 million for the three months ended June 30, 2021. The increase is a result of higher
sales generated in the three months ended June 30, 2022, compared to the three months ended June 30, 2021. 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
Revenues for the six months ended June 30,
2022 were $14.2 million, a 60.8% increase from $8.8 million for the six months ended June 30, 2021.
Gross profit for the six months ended June 30,
2022 was $5.1 million, an increase of 98%, or $2.5 million, compared to gross profit of $2.6 million for the six months ended June 30,
Pro-forma gross profit, excluding $2 million of
amortization of expenses related to acquisitions, was $7.1 million for the six months ended June 30, 2022, compared to a proforma
gross profit of $4.2 million for the six months ended June 30, 2021. Pro-forma gross profit margin, excluding amortization of expenses
related to the acquisitions, was 50.2% for the six months ended June 30, 2022, compared to 47.5 % for the six months ended June 30,
Total operating expenses for the six months ended
June 30, 2022 were $38.3 million, an increase of $3.4 million, or 9.8%, compared with $34.9 million for the six months ended June 30,
2021. The increase resulted from an increase in research and development activities and sales and marketing expenses.
Operating loss for the six months ended June 30,
2022 increased by $0.9 million to $33.2 million, compared to a $32.3 million operating loss for the six months ended June 30, 2021.
This increase is mainly due to the increase in operating expenses. Total operating expenses excluding stock-based compensation, acquisition
expenses and depreciation for the six months ended June 30, 2022 were $28.3 million compared to $24.1 million for the six months
ended June 30, 2021.
Net loss was $33.9 million for the six months
ended June 30, 2022 compared to a net loss of $32.7 million for the six months ended June 30, 2021. The increase was driven
by higher operating expenses.
Non-GAAP billings for the six months ended June 30,
2022 were $14.1 million, a 59% increase from $8.8 million for the six months ended June 30, 2021.
Non-GAAP adjusted net loss for the six months
ended June 30, 2022 was $21.1 million, a 6.5% increase from a $19.8 million non-GAAP adjusted net loss for the six months ended June 30,
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